With most of the third stimulus checks on their way, people have turned their attention to the next stimulus check. There are hopes and anticipation of more stimulus support to tide over the continuing economic crisis triggered by the pandemic.
The Economic Impact Payment under the American Rescue Plan has led to over 167M payments. Another 1.8m payments are on their way this week. Many have received their plus-up payment, follow-up checks based on fresh calculations by the IRS. This adds up to $391B distributed of the $422B set aside for direct payments under this plan.
The Stimulus Checks Are Part Of The Total Package
The payments are all part of President Joe Biden’s third stimulus package worth $1.9T and are aimed at every segment of the American society and the business community. These packages are expected to see people through the pandemic and its aftereffects. The initial two stimulus support was also focused along similar lines.
Early Signs Of An Economic Revival
There have been signs that the American economy is recovering but there is still some way to go before it returns to the pre-pandemic levels. The annualized economic growth rate was 6.4% in the first three months, much better than 4.3% in the last quarter of the previous year. The forecast is 8.6% in the next quarter, though a double-digit growth is still possible.
The Gross Domestic Product is inching close to levels before the pandemic and is expected to reach there by this summer. It is a growing indication of the sustained economic recovery, the reopening of industries and establishments, and the right response to the pandemic.
The impact of the pandemic was not felt for those who had the opportunity to work from homes during the pandemic. And with the multiple stimulus checks and lesser expenses during the pandemic, many Americans ended up saving money.
This is evidenced by the ballooning saving rate that went up to a high of 33.7% in April 2020. It has managed to stay at those levels throughout the pandemic. Even in April 2021, it has managed to stay at a healthy 14.9%, well above the pre-pandemic levels. And that accumulated savings along suppressed demands is expected to fuel a surge in the economy as it opens up.
There has also been a spurt in the housing industry. The low interest rates have led to a surge in demand, fed by the realization that everybody needs a home. The federal median price has seen an increase to $341,600, an increase of 19.1% in exactly a year. 88% of the houses put up for sale remained so for a month.
Stocks Continue Their Northward Trend
The Dow Jones is up to 34,540, an increase matching the highs of early May. It is expected to go higher as many Americans flush with funds after three stimulus checks.
A recovery in the economy is expected to fuel bigger growth. There could be early signs of an economy much stronger and fuel a boom.
The Weak Recovery Continues To Be a Hindrance In Some Sectors
It is the manufacturing sector that has been the hardest hit and has created a disparity during the pandemic. It wasn’t everybody who could work remotely during the pandemic. Many industries and businesses remain closed, including the food industry, the hospitality sector, travel and tourism, etc. 38% of respondents have reported that income levels are way below their pre-pandemic levels.
Around 18M people are still experiencing food shortages. Another 10.9M are facing accumulated rent dues. The eviction moratorium doesn’t forgive debts, only pushes your burden back. Millions are behind on their mortgage.
Employment remains low. Millions of people who lost their jobs during the pandemic are yet to return to work. Only 16 million people are getting unemployment support. But the difficult process has discouraged many Americans from applying for unemployment support.
There is a difference between a job that helps you to keep going and a job that barely helps a person to survive. Most jobs being offered include those with no additional benefits including health care.
The series of stimulus checks are short-term solutions and only the economy can recover once people get back to their jobs in greater numbers.
The Need For A Fourth Round OF Stimulus Check
Prominent Democratic lawmakers including Bernie Sander and Elizabeth Warren and Ron Wyden have petitioned President Biden for continuing direct stimulus checks once the third run out. They said that future unemployment payments should be automatically linked to the prevailing economic conditions.
Families are still struggling to provide for basic necessities and retain their homes. The legislative solutions should be continuous and not be constrained by timelines.
A letter to the Vice President had stressed the need for continual stimulus checks that would guarantee that people had their rudimentary needs that would lead to a quicker way out of the downturn.
Two notable house progressives, Rashida Tlaib and Alexandria Ocasio-Cortez were among the co-signers. They have pegged stimulus checks of $2,000 every month.
The latest to come out in support are Democratic members from the House Ways and Means Committee. They have argued that more stimulus checks will help keep 12 million people out of scarcity.
Support For An Additional Stimulus Check Among Both People and Experts
There has been majority support among Americans for recurring stimulus checks. An online petition initiated by a struggling restaurant owner in change.org has garnered more than 2.2M signatures. A study by Urban Institute has found that a fourth stimulus check could bring down poverty by 6.4%.
A State Stimulus Check
California is pushing forward with its version of a stimulus check. Governor Newsom has pushed for a $600 stimulus check for households and individuals with earnings from $30,000 to $75,000. It had been only for those earning below $30,000 till now.
Is A Fourth Stimulus Check Likely?
But this growing support doesn’t indicate that a fourth stimulus check is around the corner. The President is at the moment preoccupied with the infrastructure plan. The $2.3 trillion will help overhaul the total infrastructure that has been overlooked for decades.
Other senior members of his team have also been evasive about the possibility of a third stimulus check.
With the progress in vaccinations, more people have come out to join the workforce. 50.5% of Americans have already received their first dose and 40.7% have received both their doses.
The economy is bound to benefit from this confidence. There has been a lifting of restrictions in several states. Hiring is up across sectors. The rise in savings is bound to be reflected once the economy opens up. And with the child tax credit installments set to begin in July, it could give a further boost to spending.
