The specter of the COVID-19 pandemic continues to haunt the US economy. Now even in its third year, the tremendous impact of the pandemic and its resultant economic downturn lingers, affecting the world economy. The US economy was hit particularly hard but managed to recover from the initial crisis thanks largely to fiscal measures that included the stimulus check.
The US government responded to the crisis by enacting several policies that provide fiscal stimulus to the economy and relief to the million affected by the global disaster. The combination of substantial monetary stimulus measures by the Federal Reserve that complemental the fiscal stimulus helped jumpstart the economy.
The slew of measures ensured that low and moderate-income individuals and households remained out of the clutches of poverty, payment defaults, and homeless.
The federal stimulus cd relief initiatives were implemented by the Federal Reserve through monetary policies, and also fiscal policies implemented by the Congress, and the Trump and Biden administrations. But despite the aftereffects of the pandemic persisting, many of these programs have been discontinued.
Facing The Economic Downturn In The Absence Of Federal Stimulus Checks
Even though COVID-19 tremendously impacted the US economy, the federal administration could not muster a single stimulus check. people received only the amount pending from the 2021 stimulus check or the balance of the expanded Child Tax Credit stimulus checks.
the Federal Reserve acted on interest rates, monetary policy, quantitative easing, and multiple lending programs among many measures to help the economy recover from the effect of the pandemic.
the federal government also enacted multiple laws that provided relief to businesses, individuals and households, and local, state, and tribal governments. This comprised the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the American Rescue Plan (ARPA) Act.
The law also laid stress on the moratorium on foreclosure and eviction, student loan forbearance, paycheck protection, and the direct stimulus check that bypassed bureaucratic barriers to reach individuals and households directly.
The Debilitating Impact Of The Pandemic On The Economy
The US economy went into an immediate tailspin and a recession loomed within weeks of the declaration of a pandemic by the federal administration. The stocks slid into the bear market territory by March 2020 and it would take months before the S&P 500 recovered to pre-pandemic heights.
The unemployment rate also showed a sharp rise and reached a high of 14.7% by April 2020. It was the highest since the Great Depression almost a century ago.
The real gross domestic product (GDP) (adjusted for inflation) of the US economy fell by around 32% om the second quarter of 2020. It rebounded in the third quarter on the back of the massive infusion of funds under the CARES Act and ended the year with a positive growth of 4.0% year over year (YOY).
The Phase One of the Federal relief packages, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 was signed into law by then-President Donald Trump and allocated $8.3 billion for research for the COVID-19 vaccine and give money to state and local governments to fight the spread of the pandemic. the money was also to support efforts to stop the spread of the virus across the world.
Phase Two of the relief package, the Families First Coronavirus Response Act (FFCRA), came into Law on March 18, 2020, and allocated a relief budget that included the provision of money for families dependent on free school as there was widespread closure of schools.
The law also mandated that companies with less than 500 employees provided paid sick leave for the employees affected by COVID-19 and also provided a tax credit to employees to cover all costs.
The act also made provision of around $1 billion in extra unemployment insurance money for the states as well as loans to help states pay unemployment insurance. There was also a provision for cost waivers and funding to make pandemic testing free for all.
The Federal Housing Administration and the Federal Housing Finance Agency implemented moratoriums on eviction and foreclosures for single-family homeowners whose mortgages were FHA-insured or backed by the Federal Home Loan Mortgage Corp.
Biden Extends Protections Through Stimulus Checks And Other Measures
As part of several executive decisions announced immediately after he assumed office, President Biden’s Dept. of Education announced the extension of federally held student loan forbearance, set to expire on January 31, 2021. Loan forbearance came to be extended through December 31, 2022.
The CARES Act created a moratorium on evictions that was set to expire by July 24, 2020. The Government extended it finally till July 31, 2021. But the CDC (Center for Disease Control and Prevention) announced a temporary halt of all eviction in counties that experience a high number of cases of virus transmission.
The American Rescue Plan Act, 2021 implement a $1.9 trillion package of relief proposals and stimulus checks and was signed on March 11, 2021, by incoming president Joe Biden.
The implementation of the $1.9 trillion package of relief proposals and stimulus checks proved to be a game changer. Several facets of the ARPA such as the raising of the minimum wage to $15 an hour were excluded to pass the plan using budget reconciliation. Bills could be allowed using a simple majority.
Other than the direct $1,400 maximum cash stimulus check for individuals earning $75,000 or less and joint filers earning $150,000 or less, there were a host of other measures.
Significant among them was the expanded Child Tax Credit stimulus check that went up to $3,600 from the initial $2,000.
While children aged six and less received $3,600, those between 6 and $17 each received $3,000. 50% of the total payments were cleared through monthly payments between July and December 2021.
But attempts by Biden to extend the CTC stimulus checks through 2022 were blocked by the Republicans.
A host of other measures included expanded unemployment insurance of $300 that lasted through September 5, 2021, and $121 billion in funding for K-12 schools. $50 billion for the CDC to distribute and administer vaccines.
There were also provisions for childcare of $15 billion, and $25 billion to help childcare providers continue to cooperate and meet payroll. Airline industry workers got $15 billion in support and another $7.25 went to PPP funding.
