The IRS issued 156 million payments in the third round of direct incentive assistance, with 25 million people receiving the $ 1,400 checks this week. However, some lawmakers are pushing for a fourth round of stimulus assistance that will send ongoing payments until the pandemic ends.
So far, the federal response to the economic crisis caused by the coronavirus pandemic delivered $ 3,200 to each eligible adult: $ 1,200 through the Coronavirus Aid and Economic Security Act of March 2020; $ 600 in a relief measure in December; and $ 1,400 under the U.S. bailout plan signed by President Joe Biden in March.
Despite the financial aid, millions of Americans remain in financial distress, with about 4 in 10 people saying their income remains below pre-pandemic levels, according to a recent survey by financial services firm TransUnion. Unemployment remains high, especially in low-wage industries such as food services and hospitality, where demand is still lagging behind amid rising coronavirus rates.
For many people, in short, the last round of $ 1400 checks may not last long – a problem that thoughts of many americans which continues to struggle with unemployment and a weak labor market.
Twenty-one senators – all Democrats – wrote a March 30 letter to Mr. Biden signed in support of recurring stimulus payments, pointing out that the $ 1,400 payment handed out by the IRS will not tip people off for long.
“Nearly 6 out of 10 people say the $ 1,400 payments to be included in the rescue package will take them less than three months,” the senators wrote in the letter.
Although the letter does not specify how large the payments the senators want, a separate effort by Democratic lawmakers in January pushed for $ 2,000 monthly checks until the pandemic ends. Instead, the U.S. bailout plan took $ 1,400 into account for each adult and dependent.
Still living salary to salary
Some top economists have asked for more direct help from Americans. More than 150 economists, including former Obama administration economist Jason Furman, signed a letter last year calling for ‘repeated direct stimulus payments, which last until the economy recovers’.
Although the economy is improving, including a increase in rent last month, millions of people are still living under lower incomes and could not utilize government assistance programs, said Greg Nasif, political director of Humanity Forward, a non-profit organization for recurring stimulus payments. Only 4 out of 10 unemployed workers received unemployment benefits, according to a study by economist Eliza Forsythe in March.
Many people never applied for unemployment benefits because they did not think they were eligible, while others may have given up due to long waits and other problems.
“You’ll see reports of the economy starting to grow, but there are a lot of Americans who pay salaries to pay, and for a lot of them, government assistance programs could not help,” Nasif said.
How likely is a fourth stimulus test?
According to Wall Street analysts, you should not hold your breath. “I think that’s unlikely at the moment,” Raymond James analyst Edmond Mills told CNBC. One reason is that the Biden administration is focusing on promoting it $ 2 trillion infrastructure plan, which will reform the economy by rebuilding aging schools, roads and airports, as well as investing in projects ranging from affordable housing to broadband.
The proposal, funded by the White House by raising the corporate tax rate from 21% to 28%, may be ‘harder to pass’ than the legal aid the $ 1400 checks provided to most Americans because of opposition of Republicans some Democrats, Brian Gardner, head of Stifel policy in Washington, noted last month.
Yet only a third of Americans believe the U.S. bailout plan will help them a lot, according to a new Politico-Harvard poll. This suggests that some households feel they need more help to get through the next few months.
The assistance could be this summer, when many households will receive some form of additional incentive assistance when families with children under the age of 18 receive direct payments through the revised child tax credit. From July to December, families with children under 6 receive $ 300 per month, and those with children between 6 and 17 receive $ 250 per month per child.
“A lot of people will be surprised when the first check comes in,” Nasif said. “It will, of course, contribute to the increase in popularity for the checks.”
Vaccination-fed rebound
At the same time, the economy is expected to recover this year, thanks to rising COVID-19 vaccination rates and as the states begin to reopen. JPMorgan Chase CEO Jamie Dimon predicted in his annual letter to shareholders this week that it was an economic boom may last until 2023.
“[W]with redundant savings, new stimulus savings, huge deficit spending, more [quantitative easing by the Federal Reserve], a new potential infrastructure bill, a successful vaccine and euphoria towards the end of the pandemic, are likely to revive the US economy. This boom could easily amount to 2023 because all the spending could stretch to 2023, ‘Dimon wrote in the letter released on Wednesday.
This could reduce the rationale for the government offering more direct aid, especially if the unemployment rate recovers and more workers come from the sidelines.
By the end of the year, the country’s unemployment rate could drop to 4.3%, according to Oxford Economics. However, the road to recovery remains long as there are still 4 million workers, Oxford Economics economists Oren Klachkin and Gregory Daco noted in a research note.
“Looking ahead, the labor market is poised for an impressive run as the expansion of vaccine distribution, more reopening and fiscal stimulus leads to an increase in hiring,” they predict.