The IRS has sent out the latest batch of a stimulus check to more than 1.8 million individuals and families bringing the total payments sent under the American Rescue Fund that was signed into law by President Biden in March. But as the money dries up for most families, lawmakers have demanded more stimulus payments that would override the economic downturn.
People have got around $3,200 in stimulus checks starting from the spring of 2020. But millions of Americans continue to remain in distress and are struggling to put food on the table and meet their other basic needs. And income remains at almost half the pre-pandemic levels, a survey by the financial firm TransUnion revealed.
Unemployment Figures Point To More Stimulus Checks
Close to 16 million people are under some unemployment assistance or the other as the unemployment rate continues to stay at around 6.1%. it was around 3.5% during the pre-pandemic days. So it was apparent that the $1,400 was not going to last more than 2 to 3 months for most Americans.
Though 560,000 new jobs were added in May, the gap continues to be enormous with 10 million people still without a regular job after the onset of the shutdown due to the pandemic. And there has been no let-up in the number of people struggling to make ends meet.
The Consequences Of The Injecting Direct Cash Into The Economy
The post-pandemic recovery of the economy is poised to be the fastest in years with an expected growth of 6.4% annualized rate just in the 1st quarter. But there is also concerns of the state of the financial and labor market, and the effect the stimulus check has on the inflation rate.
While the injection of stimulus money has been a source of temporary solace for many, it has also led to a sudden rise in inflation, which though notable will have some effect. But Jerome Powell, the Fed Chairman, has said that easing pandemic-related bottlenecks in supply should also ease inflationary pressures.
An additional area of concern is the steady fall in economic burden that the private sector appears to be in no position to handle at least for the present. This could lead to people holding on to their money and further impeding economic growth.
The Chances Of An Immediate Stimulus Checks In 2021
There have already been three separate types of direct stimulus payments in 2021 including the $1,400 worth of third stimulus checks. There are also the expanded child tax credit payments set to start in the middle of July. That should put between $3,000 and $3,600 per child in the hands of families over a year.
The Child Tax Credit is an advance against the 2021 income tax return and 50% of the amount will be paid in monthly installment between July and December 2021. President Biden is all for extending the Child Tax Credit payments till 2025 and has sought the assistance of the Senate and the house in that direction.
Around 4 million American children could come out of the grips of poverty if the Child Tax Credit is extended indefinitely, according to a report published by the Annie E. Casey Foundation.
The extension of the weekly federal unemployment support of $300 has been extended till September 6, 2021. So was the Pandemic Unemployment Assistance that went out to freelancers, gig workers, and the unemployed. Several lawmakers had presented a petition for extending unemployment support.
But many states are opting out of the unemployment benefit system, citing the lack of people willing to return to their jobs.
Will The Future American Families Plan Include Direct Stimulus Payment
The American Families Plan, which is set to follow the infrastructure bill, could include stimulus payment in some form. It seems to be the most likely platform for further stimulus checks.
There are also plans for an increase in the minimum wages that have been struck at $7.25 per hour. The President has in his speech before the Houses called for raising the minimum wages to $15 per hour. Influential senators, including Kyrsten Sinema and Mitt Romney, have also spoken along similar lines, though some lawmakers are willing to settle at $11 per hour.
The Possibility Of The Infrastructure Bill
The President has been occupied with passing the infrastructure bill but wants the Republican support on the same. He wants an increase in bipartisanship in any future decision by the administration. The White House is hopeful of getting it through before the recess in August.
21 senators belonging to both parties have urged the President to go ahead and have promised that getting the bill through will not be tough if it involves a trillion dollars. A group is set to meet in the White House and discuss the structure for a bipartisan deal for the infrastructure bill that would be limited to $1.2 trillion.
The present bill would limit its focus on traditional infrastructure. That could be followed by a second infra bill that would have the support of only the Democrats but would include the areas not covered by the first infrastructure bill.
The second bill hinges on a partial economic recovery after the summer. That would ease resistance from within the Democratic party. Some Democrats are opposed to the frequent use of budget reconciliation to pass bills along party lines and leaving out the Republicans.
The Positive Effect Of The Vaccination Drive
The acceleration in the vaccination drive could have a positive effect on the economy. There are hopes that an economic boon could be in the offing and could last till 2023 according to Jamie Dimon, CEO of JPMorgan Chase.
He cited the new stimulus savings, the rice in deficit spending, the rise in confidence with the successful implementation of the infra bill, and the success of the vaccination drive as factors that could cause a sustained spell of the economic boom that should extend well into 2023.
That should ease the need for sustained stimulus checks as more workers come off the sidelines with renewed confidence and join the workforce.
This could lead to a fall in the unemployment rate and there are hopes that it would fall to 4.3%, not yet the pre-pandemic levels but close enough. Gregory Daco and Oren Klachkin, economists at Oxford Economics have said that the road to pre-pandemic levels of unemployment is still some way away as 4 million workers have stepped back from the workforce.
But the future looks bright as the combination of the vaccine drive, the opening of more business sectors, and the fiscal stimulus gives a boost to hiring across businesses.
The facts as they stand now don’t seem too bright for immediate stimulus checks in 2021. While Press Secretary Jen Psaki has said that the President is open to ideas that would help effectively move the economy forward, there seem to be no immediate developments on that front.
