The stimulus check payments have been the mainstay of the economic support given by the federal government during the pandemic. Right after the pandemic broke out across the US and led to a nationwide shutdown, the federal government declared an immediate round of stimulus relief that was followed by successive payments covering the pandemic and the economic downturn that followed.
These stimulus checks and other allied support measures for target groups enabled Americans to tide over the acute economic decline that followed the pandemic. till the end of 2021, Americans successive federal relief measures to see out the acute crisis that followed the pandemic.
The pandemic-era stimulus checks supported many Americans through the troubled times and helped them reduce debt, pay bills, put food on the table, and build savings. For many, it drastically altered the way they thought about money.
Stimulus Checks Led To A New Approach To Money For Many
The stimulus checks changed the way many low and moderate-income families, about their spending habits and the way they could manage their money. The benefits of the pandemic stimulus checks were beyond the thousands of dollars that beneficiaries received. The whole process rewired the way people thought about money.
Many families with dependents received more than $10,000 from the three rounds of economic impact payments. A total of 472 million payments were issued by the federal government with a combined total payment of $803 billion.
The effort amounted to an exceptional experiment to prop up individuals and households as the pandemic cratered the American economy.
The stimulus checks and parallel federal support helped prop up the economy at that state but have come to the epicenter of a debate as to whether the financial assistance directly contributed to helping fuel inflation which continues to remain on its perch of an unprecedented high of over 4 decades.
The stimulus checks were undoubtedly a lifeline offered to millions of low and moderate-income households during the worst phase of the jobless phase after the Great Depression. Recipients were able to use the money in various ways from meeting immediate needs such as household staples, clearing debts, and creating rainy-day funds.
The direct sending of funds made a big difference for households as they now had the freedom to spend the money according to priorities. While for some putting food on the table and paying off their debts mattered most, others had the luxury of putting aside a part of the amount and it has come as a great backup later when prices went up at a rapid pace in 2022.
Many households used the funds to pay off car loans and credit card debts. This helped improve their credit scores. The emergency funds, something that most American consider unthinkable, were something to lean on as most people continued to remain without a steady source of income long after the pandemic shutdown was lifted.
Many sectors like tourism and travel remained severely impaired for over a year as travel restrictions continued to be in place across the world with a spurt in different variants of the virus.
In a strange twist of events, people felt more financially stable than during any other period in their life. The buffer afforded by the stimulus check and the associated stability and peace of mind also brought about a psychological change in family members. For the first time, families could afford to automate their payments for their car loans, credit cards, and utilities. This was something that had never happened before as they were never sure about their financial position for the next week or month.
The stimulus check changed how people thought about what could be possible, within the realms of possibility. It also changed people’s personal spending habits and how they managed their finances.
The stimulus check came about following a series of legislations. It started with the CARES Act in April 2020, immediately after President Trump was forced to declare a shutdown as the pandemic tore into the continent with ferocity, mainly due to Trump dithering with taking any form of action even as he blamed China for the mess.
The CARES Act was finally passed and brought beneficiaries a $1,200 stimulus check. this was followed by the second worth $600 in December 2020, and the biggest one of them all, the $1,400 stimulus check signed by President Biden under the American Rescue Plan Act.
Qualifications Such As The Payment Amounts For Dependents And The Income Limits Change Over The 3 Funding Tranches
Data released after the census conducted by the Census Bureau shows that most households used such funds for household products including food. They also used it to make payments for rent, vehicles, utility bills, and other debt payments including mortgages.
To a lesser extent, beneficiaries were able to use them to buy clothes and recreational goods, and also to invest and make savings.
One of the biggest savings for households was that they could repay credit card debts and make huge savings on interest and penalties. Families had accumulated huge credit card debts immediately after the pandemic struck and people had to rely on cards for regular payments, that is till they used up the limit of the cards.
But even the stimulus checks were not sufficient for most to make a dent in their card debts. For most, it was only paying off part of the huge accumulated debts. They say that the card debts had climbed up to too high a level for them to pay the debts off with only stimulus checks.
People had been without a source of income for months and in many sectors, it was even worse. The tourism and travel industry, for instance, was shut down for close to a year as the fear of successive strains of the virus kept people away from traveling for anything more than for the most vital reasons.
Households used innovative approaches to keep afloat. While some used the debt shuffle approach to stay afloat, others took advantage of multiple offers for a balance transfer that carried periods of no interest. Others relied on stimulus checks to help cover higher household costs for groceries and other items like diapers.
