The IRS issued some 161 million payments in the third round of direct stimulus assistance, with 2 million people this week in line to receive the 1,400 checks. 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 the Coronavirus pandemic awarded $ 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 aid, millions of Americans remain in financial distress, with about 4 in 10 people saying their incomes remain below pre-pandemic levels, according to a recent survey by financial services company TransUnion. Unemployment remains high, especially in low-wage sectors such as food services and hotels, where demand continues to lag amid rising coronavirus rates. One in three Americans has struggled to cover basic living expenses in the past three months, according to the Kaiser Family Foundation. in a February poll.
For many people, in short, the latest round of checks for $ 1,400 may not last long – a problem that is on the verge of the minds of many Americans who continue to fight against unemployment and the weakness of the labor market.
Twenty-one senators – all Democrats – signed a letter on March 30 to Mr. Biden in favor of recurring stimulus payments, noting that the $ 1,400 payment distributed by the IRS will not last long on people.
“Almost 6 in 10 people say the $ 1,400 that should be included in the bailout will last less than three months,” the senators wrote in the letter.
While the letter does not specify the amount of payments senators are seeking, a separate effort by Democratic lawmakers in January pushed for monthly checks of $ 2,000 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 are using most of the funds to pay off debt or reduce their savings, according to new analysis from the Federal Reserve Bank of New York. This could indicate that people are using the money to reduce the debt 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 believe they will receive soon, a third payment say it’s important to their finances in the short term, Bankrate.com said earlier this month. That’s down from around 8 in 10 people in March 2020, when the pandemic caused widespread unemployment, but overall the proportion of people in need of extra support remains high over a year. later, 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.
Paycheck still alive to paycheck
Some senior economists have called for more direct aid to Americans. More than 150 economists, including former Obama administration economist Jason Furman, have signed a letter last year, which called for “recurring direct stimulus payments, until the economy recovers.”
Although the economy is improving, including a increase in hires last month, 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 demands recurring stimulus payments . Only 4 in 10 unemployed workers actually received unemployment assistance, according to a March study by economist Eliza Forsythe.
Many people never applied for unemployment benefits because they didn’t think they were eligible, while others may have given up due to long waits and other issues.
“You’ll 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, government relief programs don’t. have not been able to help, ”Nasif said.
What is the probability of a fourth stimulus check?
Don’t hold your breath, according to Wall Street analysts. “I think that’s unlikely at the moment,” Raymond analyst James Ed Mills told CNBC. One reason is that the Biden administration is focused on advancing its $ 2 trillion infrastructure plan, 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 for 1,400 checks. $ to most Americans because of opposition from Republicans and some Democrats, noted Brian Gardner, Stifel’s chief Washington policy strategist, last month.
Even so, only about a third of Americans believe the US bailout will help them much, according to one. new Politico-Harvard poll. This suggests that some households feel they need more help to get them through the next few months.
This help could 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 between 6 and 17 will receive $ 250 per month per child.
“A lot of people are going to be surprised when this first recording arrives,” Nasif said. “This will obviously add to the skyrocketing popularity of checks.”
At the same time, the economy is expected to rebound this year thanks to rising COVID-19 vaccination rates and states reopening. Jamie Dimon, CEO of JPMorgan Chase, predicted in his annual report letter to shareholders last week that an economic boom could last until 2023.
“[W]with excess savings, new stimulus savings, huge spending [quantitative easing by the Federal Reserve], a potential new infrastructure bill, a successful vaccine, and euphoria around the end of the pandemic, the U.S. economy is likely to explode. This boom could easily last until 2023, as all spending could extend until 2023, ”Dimon wrote in the April 7 letter.
This could lessen the reason the government is offering more direct aid, especially if the unemployment rate recovers and more workers come off the sidelines.
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 outside the workforce, Oxford Economics economists Oren Klachkin and Gregory Daco noted in a research note.
“Looking ahead, the job market is set to experience impressive growth as the expansion of vaccine distribution, more reopenings and fiscal stimulus lead to an upsurge in hiring,” they predict.