Fourth most recent stimulus check: what’s behind the recurring payments push?
The IRS issued more than 169 million payments during the third round of direct stimulus aid, with checks for $ 1,400 reaching most US households. But some advocates and 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 has paid eligible adults $ 3,200: $ 1,200 under the Coronavirus Aid Relief and Economic Security Act in March 2020 $ 600 in a measure of December relief; and $ 1,400 as part of the US bailout, signed in March by President Joe Biden.
Despite this financial assistance, millions of Americans remain in financial difficulty and the spread of the Omicron variant is. More than a quarter of Americans struggled to pay for household expenses in the past week, according to new data from a census survey that asked people in the first two weeks of December.
The unemployment rate stands at 4.2%, still above its pre-pandemic level of 3.5%. And while companies hire, there are still about 2.3 million fewer people on payrolls today than before the pandemic. Economists are concerned about the spread of the Omicron variant, which has events including Broadway shows.and caused the cancellation of
Rising COVID-19 cases “are hitting demand across recreation, entertainment, travel and food services, as high-frequency data indicates,” said David Kelly, chief global strategist at JPMorgan Funds in a January 3 research note. “It will also lead to widespread absenteeism in early 2022, putting a significant drag on the economy in the first quarter, after a very strong fourth quarter.
At the same time, tax support for more than 30 million American families ended last month, with the final payment of the child tax credit landing in bank accounts on December 15. These checks – which provided up to $ 300 per eligible child – will not continue into 2022 because the Build Back Better Act, which provided for a one-year extension of the program, failed toof Senator Joe Manchin, a Democrat from West Virginia.
For many people, in short, stimulus aid is long gone, a problem that Change.org petition began last year calling on lawmakers to pass legislation for monthly recurring payments of $ 2,000.who continue to struggle against unemployment and a weak labor market. In fact, nearly 3 million people have signed a
Some advocates are urging lawmakers to push forward with new stimulus efforts, including for one particular group that has been hit hard by rising inflation amid the pandemic. As of December, more than 95,000 people signed a petition from the Senior Citizens League, an advocacy group for American seniors, to provide a one-time check for $ 1,400 to seniors.
The rise in inflation in 2021 far exceeded the 1.3% benefit increase Social Security recipients received at the start of this year. But even with the 5.9% cost of living increase coming in, many older people will always lag behind inflation, which has jumped
“It would help people buy an extra week of groceries for a few months,” said Mary Johnson, Social Security and Medicare policy analyst with the Senior Citizens League. “A stimulus payment would help them manage these higher rising costs.”
Some lawmakers have taken up the idea of âârecurring payments. Twenty-one senators – all Democrats – signed a letter of March 30 to Mr. Biden in support of the recurring stimulus payments, noting at the time that the $ 1,400 payments about to be distributed by the IRS would not delay people 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, some states are Golden State Stimuluscheck via a new effort from Gov. Gavin Newsom. This effort will provide $ 600 to low- and middle-income residents who have filed their 2020 income tax returns. Florida and parts of Texas have authorized bonuses for teachers to help offset the impact of the pandemic.. About two-thirds of California residents are likely to qualify for a “
The letter from the US Senators does not specify the amount of recurring payments they are seeking. A separate effort from Democratic lawmakers in January 2021for $ 2,000 in monthly checks until the end of the pandemic. Instead, the American Rescue Plan authorized one-time payments of up to $ 1,400 for each eligible adult and dependent.
Child tax credit: end of December
Some families received another form of stimulus assistance when the IRS in Julyon the bank accounts of parents eligible for the Child Tax Credit (CTC). Families received an average of $ 423 in their first CTC payment, according to an analysis of census data from the left-wing advocacy group Economic Security Project.
Eligible families received up to $ 1,800 in cash through December, with the money split evenly over the six months from July through December. The aid was due to the expanded CTC, which is part of President Joe Biden’s US bailout.
Eligible families received $ 300 per month for each child under 6 and $ 250 for children 6 to 17. Several families whosaid the extra money would go towards child care, back-to-school supplies and other essentials.
While progressives and some Democrats have urged lawmakers to pursue the improved CTC, it appears to be stuck for now. This means families will not receive a CTC payment in January or beyond.
Emergency fund, savings
So far, people who have received all three rounds of stimulus payments have said they use most of the funds to pay off debts or spend money on savings, according to a recent report. To analyse of 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.
Millions of Americans have been spared the three rounds of stimulus payments, researchers have found.
But when stimulus faltered, such as last fall when Congress stalled on another round of aid, the woes increased “markedly” in November and December, according to one. May Analysis data from the University of Michigan census.
CTC reduction could provide more headwinds for families and the economy, noted Kelly of JPMorgan Funds.
“The IRS reports that these payments totaled about $ 15 billion per month and that their sudden cessation could reduce recently burgeoning spending on food and other essentials,” Kelly noted.
Still living paycheck to paycheck
Although the economy is improving, millions of people continue to suffer from reduced incomes and have not been able to take advantage of government aid programs, said Greg Nasif, political director of Humanity Forward. Only 4 out of 10 unemployed have actually benefited from unemployment assistance, according to a March study by economist Eliza Forsythe.
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.
What is the probability of a fourth raise check?
Don’t hold your breath, according to Wall Street analysts.
On the one hand, the Biden administration has focused on spending on infrastructure to spur economic growth, assuming that investing in roads, trains, and other direct investments will help get people back to work and to stimulate the ongoing recovery.
Second, economists have pointed the finger at relief efforts such as the three rounds of stimulus checks to help inflation. Because Americans had money in their pockets, they increased their spending on goods such as furniture, cars, and electronics. Combine this with, and the result was significantly higher inflation, according to economists.
Without further stimulus efforts on the horizon, it is likely that inflation could slow down in 2022, according to Brad McMillan, chief investment officer at Commonwealth Financial Network. “One of the causes of inflation has been an explosion in demand induced by federal stimulus measures,” he noted in a December report. “But this stimulus is now over.”
He added: “Yes, we will continue to face inflation and supply issues, but they are moderating and will continue to do so.”