The IRS issued nearly 167 million payments during the third round of direct stimulus aid, with an additional 1.8 million people online this week to receive the checks for $ 1,400. But some lawmakers are pushing for a fourth round of stimulus aid that would effectively send recurring payments until the pandemic is over.
So far, the federal response to the economic crisis caused by theawarded $ 3,200 to each eligible adult: $ 1,200 through the Coronavirus Aid Relief and Economic Security Act in March 2020; $ 600 in a December relief measure; and $ 1,400 as part of the US bailout package signed in March by President Joe Biden.
Despite this financial help, millions of Americans remain in financial difficulty, with about 4 in 10 people saying their incomes remain below their pre-pandemic levels, according to a survey by financial services company TransUnion.
Across the country, nearly 16 million people receive some form of unemployment assistance. Unemployment ratewell above its pre-pandemic level of 3.5%, and unemployment rates remain particularly high in low-wage industries such as restaurants and hotels. One in four Americans struggled to pay for household expenses in the past week, according to Center on Budget and Policy Priorities analysis of data from a census survey in early May.
For many people, in short, the latest round of $ 1,400 checks may not last long – a problem that is on the way.who continue to struggle against unemployment and a weak labor market. Indeed, more than 2.2 million people have signed a Change.org petition launched last year that calls on lawmakers to pass legislation for recurring monthly payments of $ 2,000.
Some lawmakers have taken up the idea. Twenty-one senators – all Democrats – signed a March 30 letter to Mr. Biden supporting recurring stimulus payments, stressing that the $ 1,400 payment distributed by the IRS would not hold people back for long.
“Almost 6 in 10 people say the payments of $ 1,400 that are to be included in the bailout will last them less than three months,” the senators wrote in the letter.
Meanwhile, millions of Californiansvia a new effort by Governor Gavin Newsom. His plan would send $ 600 stimulus checks to residents of the state as part of a multibillion-dollar spending plan he presented earlier this month, with about two-thirds of Californians eventually receiving a stimulus payment as part of its proposal.
Letter from US Senators does not specify the amount of payments they seek, but a separate effort from Democratic lawmakers in Januaryfor $ 2,000 in monthly checks until the end of the pandemic. Instead, the American Rescue Plan authorized $ 1,400 for each eligible adult and dependent.
So far, people who have received all three rounds of stimulus payments have said they use most of the funds to pay down debt or save money, according to a recent analysis by the Federal Reserve Bank of New York. . This could indicate that people are using the money to reduce debts they incurred during the pandemic as well as to build an emergency fund in the event of another shock.
Still, many people have said they plan to spend their stimulus funds for the most part – the costs of food and shelter were cited as the top two uses for the third stimulus check after savings, poll found. February issue from Bloomberg / Morning Consult.
Nearly 7 in 10 Americans who have received, or expect to receive soon, a third payment say it’s important to their finances in the short term, Bankrate.com said in April. This is down from around 8 in 10 people in March 2020, when the pandemic caused widespread unemployment, but overall the share of people in need of extra support remains high over a year longer. late, according to the personal finance company.
About 1 in 3 people said stimulus aid would help them support them for less than a month, according to the survey.
Still living paycheck to paycheck
Some major economists have called for more direct aid to Americans. More than 150 economists, including former Obama administration economist Jason Furman, signed a letter last year calling for “recurring direct stimulus payments, until the economy recovers.”
Although the economy is improving, including a, millions of people continue to suffer from reduced incomes and have not been able to benefit from government aid programs, said Greg Nasif, political director of Humanity Forward, a nonprofit that calls for stimulus payments recurring. According to a March study by economist Eliza Forsythe, only 4 in 10 unemployed people actually received unemployment assistance.
Many people never applied for unemployment benefits because they thought they were not entitled to it, while others may have given up due to long waits and other issues.
“You will see reports of how the economy is starting to grow, but there are a lot of Americans who are living paycheck to paycheck, and for many of them, aid programs government have not been able to help, ”Nasif said.
What is the probability of a fourth raise check?
Don’t hold your breath, according to Wall Street analysts. “I think that’s unlikely at the moment,” Raymond James analyst Ed Mills told CNBC. One reason is that the Biden administration is focused on advancing its almost, which would reshape the economy by rebuilding aging schools, roads and airports, as well as investing in projects ranging from affordable housing to broadband.
The proposal, which the White House said would be funded by raising the corporate tax rate from 21% to 28%, could be “more difficult to pass” than the relief bill that provided the checks. $ 1,400 to most Americans because of opposition from some Republicans to Democrats, noted Brian Gardner, Stifel’s chief political strategist in Washington.
Despite this, only about a third of Americans think the US bailout will help them much, according to a Politico-Harvard poll. This suggests that some households feel they need more help to get through the next few months.
This assistance could come this summer, when many households will receive some form of additional stimulus assistance when families with children under the age of 18 receive direct payments for six months through the revised child tax credit. From July to December, families with children under 6 will receive $ 300 per month, and those with children 6 to 17 will receive $ 250 per month per child.
“A lot of people are going to be surprised when this first check comes in,” Nasif said. “This will obviously add to the rise in popularity of checks.”
Families could benefit from more tax relief in the years to come, if Mr BidenGo ahead. As part of the plan, the expansion of the child tax credit would last until 2025, giving families four more years of greater tax relief for children.
At the same time, the economy is expected to rebound this year thanks to increased COVID-19 vaccination rates and states reopening. JPMorgan Chase CEO Jamie Dimon predicted in his latest annual letter to shareholders that an economic boom.
“[W]excess savings, new stimulus savings, huge deficit spending, more [quantitative easing by the Federal Reserve], a potential new infrastructure bill, a successful vaccine, and the euphoria of ending the pandemic, the U.S. economy is likely to explode. This boom could easily continue until 2023 as all spending could extend to 2023, ”Dimon wrote in the April 7 letter.
This could lessen the rationale for the government to offer more direct aid, especially if the unemployment rate picks up and more workers retire.
By the end of the year, the country’s unemployment rate could drop to 4.3%, according to Oxford Economics. Even so, the road to recovery “remains long” as there are still 4 million workers who have dropped out of the workforce, Oxford Economists Oren Klachkin and Gregory Daco noted in a research note.
“Looking ahead, the job market is about to experience an impressive run, as expansion of vaccine distribution, more reopenings and fiscal stimulus drives hiring increases,” they predict.