( CBS DFW ) — Three rounds of stimulus checks have helped keep many Americans afloat the last 15 months. Despite the ongoing economic recovery, many people aren't experiencing that improvement in their own lives. Unemployment is still well above pre-pandemic levels, and millions of jobs have not returned. Can we count on a fourth stimulus check for more support?
That question remains unanswered.
The third round of relief payments started almost three months ago, courtesy of the American Rescue Plan (ARP). Since then, approximately 169 million people have received up to $1,400 each, totaling $395 billion of the $422 billion set aside. That includes the 2.3 million checks and plus-up payments that went out last week. The ARP checks followed closely behind the $600 payments from January, which came nine months after the $1,200 payments from the pandemic's early days.
Each of the relief payments was an attempt to cushion people from COVID's economic impact and support the economy in the process. They seem to have worked, leading some to question if another stimulus check is necessary.
Economic Recovery For Some
In the first quarter of 2021, the U.S. economy grew at an annualized rate of 6.4 percent , faster than the 4.3 percent rate from the fourth quarter of 2020. The Conference Board forecasts 9.0 percent growth in the second quarter and continued growth through the rest of the year. That rise could even reach into the double-digits at some point. The country's gross domestic product (GDP), an estimate of economic activity across the country, is close to where it was before the pandemic. Experts believe it will rise to its pre-pandemic level by this summer. According to the Bureau of Economic Analysis, "the increase in first quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic."
Broad segments of the workforce have endured little economic hardship during the pandemic. Many jobs performed at a desk in an office are just as easily performed at a desk in someone's home. And with fewer spending outlets during the pandemic, plus three stimulus checks, many Americans have been saving more money. The personal saving rate ballooned to 33.7 percent in April of 2020 and has remained well above pre-pandemic levels ever since. In April of 2021, it sat at 14.9 percent , still well above where it was before the pandemic. On Face the Nation , Bank of America CEO Brian Moynihan recently estimated that its customers have not spent 65-70 percent of their last two stimulus checks. With many households sitting on a lot more money than they had in early 2020, pent-up demand should drive the broader economy as it continues to open up.
The housing market has also surged, thanks to low interest rates and people stuck at home realizing the limitations of their living space. The National Association of Realtors recently reported that the national median sales price for a home hit $341,600 in April, up a record 19.1 percent from April of 2020. That number rose all over the country. Much of that rise was likely pushed by houses priced above the median. Housing inventory increased over March, but was still down 20.5 percent year over year. And of the homes that sold in April, 88 percent were for sale for less than a month.
The stock market continues to perform well too. The Dow Jones opened Monday morning at 34,472, close to highs reached in early May. That's even as inflation concerns and supply chain issues linger. Individual investors, flush with extra stimulus cash, have poured into the market. Bigger investors are betting on a strong economic recovery as the year progresses.
While certain experts foresee some of the strongest economic growth in decades, many are also worried about higher inflation. Recent projections show prices rising about 4.4 percent in 2021, as compared to 2.3 percent in 2019 and 1.7 percent in 2020. But the latest data shows prices rising 5.0 percent over the last 12 months, the highest 12-month rate in over a decade. May prices moved up 0.6 percent from April. Some of the rise is likely due to depressed prices returning as the economy moves on from the pandemic.
According to Yeva Nersisyan, Associate Professor of Economics at Franklin & Marshall College, "we had a whole year where prices didn't really increase. And for some stuff they actually decreased. So, if you're comparing this year to that year, then the reading is going to be higher than if the prices had continued to just go up. If there wasn't a pandemic, the prices would just go up more steadily, and we wouldn't see that kind of a jump that we saw recently."
Price hikes and shortages also stem from the economy opening up all at once. Companies can't keep pace with a year's worth of pent-up consumer demand. They also have to revive and retool their supply chains in the midst of drastic changes in consumer demand patterns. COVID has altered how and what people consume. The way these changes play out in a post-COVID world remains to be seen. Companies, however, have to guess now where demand for their product will be when all the dust settles. Predicting the future is hard enough in a normal economy. It becomes much harder in an economy emerging from a pandemic. These price changes and shortages across a whole range of products will likely continue to plague consumers in the short-term. But economists predict they should improve with time.
No Economic Recovery For Others
The pandemic has shed more light on growing disparities across the broader economy. While many households have financially flourished during COVID, many others have fallen far behind where they were in early 2020. Much of the disparity depends on whether wage earners could work remotely or needed to be on-site.
Financial insecurity is still widespread, with 38 percent of respondents to a first-quarter TransUnion survey saying their current income fell short of their pre-pandemic income. The loss of a job and the loss of hours were the main reasons. Nine percent of American adults (approximately 19 million people) reported a shortage of food in their household over the previous week, according to U.S. Census survey data from the second half of May. Approximately 14 percent of renters (10.4 million people) have fallen behind on their rent, including 20 percent of renters with children in their household. The federal eviction moratorium set to expire on June 30 doesn't forgive rent owed, it pushes the debt into the future. So a tidal wave of evictions may be just weeks away. Millions are also struggling to pay their mortgage.
As of late May, over a quarter of American adults (61 million people) reported some difficulty keeping up with expenses in the prior week. A survey from the Federal Reserve Bank of New York determined that over 58 percent of those receiving a third stimulus check have or will use the money on consumption or paying down debt. That includes debt incurred during the pandemic. A Bloomberg/Morning Consult poll from last February listed food and housing costs as the second and third most popular uses of the then-upcoming stimulus.
Employment also remains well below pre-pandemic levels. While the unemployment rate fell to 5.8 percent in May, About 7.6 million fewer people are employed today as compared to early 2020. And most of them were in low-wage jobs lost during the pandemic that have not returned. Approximately 376,000 people initially applied for unemployment insurance in the first week of June, the lowest number since the start of the pandemic. (A typical pre-pandemic week saw about 250,000 new unemployment applications.) Another 71,000 applied for Pandemic Unemployment Assistance (PUA), which supports freelance and self-employed workers. As of the week ending May 22, over 15 million workers were receiving some form of unemployment aid. But many jobless Americans have not received unemployment insurance and other government benefits, because of long waits, perceived ineligibility and other issues.
It's unclear why job growth continues to lag expectations. Some have argued that overly generous benefits are making unemployment more attractive than working. But other considerations factor in to one's ability to work. With many schools still remote or out for the summer, a lot of parents lack adequate childcare. Full vaccination rates just passed 40 percent, so the threat of COVID still leaves many uncomfortable working around strangers in public. A growing gap between labor force skills and job requirements makes hiring more difficult. And then there's the general friction that inevitably arises when an entire economy slams its foot on the gas.
Many who are willing to work cannot find jobs with the wages and benefits they need to survive. As Marie Newman , a U.S. Representative from Illinois, put it, "there is not a shortage of Americans looking for work, there is a shortage of Americans willing to work for starvation wages with no benefits, no health care, and no protections during a pandemic."
Many states are trying to force the issue and push people back into the job market. These states, all led by Republicans, have announced the discontinuation of the $300 federal unemployment benefit bonus for their citizens ahead of the official Labor Day end date. Alaska, Iowa, Mississippi, and Missouri stopped benefits on June 12. Alabama, Idaho, Indiana, and Nebraska are among the states stopping benefits on June 19. Florida, Georgia, Ohio, and Texas follow on June 26. A total of 25 states will cut off federal unemployment benefits early.
The federal unemployment bonus and the previous round of stimulus checks has helped those Americans still awaiting the recovery to pay bills and put food on the table. But they were a short-term fix for a longer-term problem. The money seems to be running out well before many people can once again earn a living wage. And some politicians feel that the payments haven't been enough.
Support For A Fourth Stimulus Check?
A group of Democratic Senators, including Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, sent a letter to President Joe Biden at the end of March requesting "recurring direct payments and automatic unemployment insurance extensions tied to economic conditions."
As the Senators reasoned in their letter, "this crisis is far from over, and families deserve certainty that they can put food on the table and keep a roof over their heads. Families should not be at the mercy of constantly-shifting legislative timelines and ad hoc solutions."
An earlier letter to President Biden and Vice President Kamala Harris from 53 Representatives, led by Ilhan Omar of Minnesota, staked out a similar position. "Recurring direct payments until the economy recovers will help ensure that people can meet their basic needs, provide racially equitable solutions, and shorten the length of the recession."
Additional co-signers included New York's Alexandria Ocasio-Cortez and Michigan's Rashida Tlaib, two other notable names among House Progressives. The letter didn't place a number on the requested stimulus payments. But a tweet soon after put it at $2,000 per month for the length of the pandemic.
$2,000 monthly payments until the pandemic is over. https://t.co/6tuia6prFJ
— Ilhan Omar (@IlhanMN) January 28, 2021
A May 17 letter from members of the House Ways and Means Committee renewed the pushed-for additional stimulus. "The ARP's $1,400 checks alone will keep 11 million people out of poverty this year, with UI (unemployment insurance) expansion and other provisions in the bill accounting for the another five million. A fourth and fifth check could keep an additional 12 million out of poverty. Combined with the effects of the ARP, direct payments could reduce the number in poverty in 2021 from 44 million to 16 million."
A majority of Americans also favor recurring relief payments. According to a January poll from Data For Progress , nearly two-thirds of all voters support $2,000 monthly payments to all Americans for the length of the pandemic. Supporters include a majority of Independents and Republicans. A struggling restaurant owner's online petition calling for $2,000 monthly payments for every American adult has over 2.3 million signatures.
The Urban Institute estimated that another stimulus payment could reduce poverty by at least 6.4 percent in 2021. Many economists are also onboard. A 2020 open letter from experts in the field argued "direct cash payments are an essential tool that will boost economic security, drive consumer spending, hasten the recovery, and promote certainty at all levels of government and the economy – for as long as necessary."
California Governor Gavin Newsom is supporting a fourth stimulus check for state residents. His recent $100 billion budget proposal includes a $600 payment to individuals and households earning between $30,000 and $75,000 per year. The state's previous stimulus went to those with an annual income under $30,000.
The Biden administration, which authored the third round of stimulus, isn't against a fourth round of stimulus checks. But the president does recognize their high price tag. He also seems to have other priorities, namely the American Jobs Plan and the American Families Plan. Neither includes another relief payment in its proposed form.
"He's happy to hear from a range of ideas on what would be most effective and what's most important to the economy moving forward," said White House Press Secretary Jen Psaki. "But he's also proposed what he thinks is going to be the most effective for the short term for putting people back to work, to getting through this pivotal period of time, and also to making us more competitive in the long term."
How Likely Is A Fourth Stimulus Check?
All of this tacit and explicit support keeps alive the possibility of another round of stimulus checks — or recurring stimulus checks. It doesn't make either of them likely, however. And there are many reasons why.
Vaccinations are progressing steadily. Adults and those at least 16 years old are now eligible to be inoculated in all 50 states, and some places allow vaccinations for those as young as 12. Three different options are available to the public. But actually putting needles in arms still takes time, even with supply surpassing demand. Americans have received over 309 million doses , with 52.4 percent of the population having received at least one dose and 43.4 percent completely vaccinated. Vaccination numbers continue to increase at a rate of over one million doses per day. The Centers for Disease Control and Prevention (CDC) has advised that the fully vaccinated can forgo masks and social distancing in most indoor and outdoor settings.
With vaccinations rising and guidance becoming less strict, the nation's economy continues to recover. State and local governments have loosened restrictions, which helps businesses. Jobs are available in many sectors. Many industries are even complaining of worker shortages. The average for new unemployment claims over four weeks continues to push downward. Consumer confidence , while much higher than it was during the pandemic, may soon start to wane as inflation continues to be a concern. Optimism about business conditions and the job market may also start to slip.
Consumer spending drives two-thirds of the country's economy. And the third stimulus check, along with excess pandemic savings, has boosted people's spending power. That spending power will increase even more when monthly Child Tax Credit payments start in July. An improved financial position generally also raises optimism for the future. The ongoing vaccinations, which will continue to allow the economy to safely reopen, certainly help. All that additional spending, along with the release of pent-up demand, should lead to more jobs as companies hire to address consumer needs. With the economy opening up and gaining traction, a fourth round of stimulus checks seems less urgent.
In Nersisyan's view, "let's see if people still need more assistance. Let's see how the economy's doing as things keep opening up and the vaccination rates go up and things go back to some sense of normal. And let's see where the unemployment numbers are. Are people still running behind on their rents and mortgages and so on? And based on that, let's decide whether we need to inject more spending into the economy. I would say wait and see right now."
Aside from the generally improving economy, the political machinations of Washington make a fourth stimulus check a challenge. The American Rescue Plan, which included the third stimulus check, passed along party lines. Republicans were not interested in spending anywhere close to $1.9 trillion, though some did support the third relief payment. They termed the package a "blue state bailout," claiming it went well beyond the scope of COVID and would increase the deficit, leading to inflation.
The Democrats used a process called reconciliation to pass the bill in the Senate without Republican support. That allows budget-related matters to proceed with a simple majority rather than the filibuster-proof 60 votes. Generally only one reconciliation bill can pass per fiscal year. But a subsequent ruling by the Senate parliamentarian , who interprets the legislative body's rules, opened up a path for additional spending legislation. Without reconciliation, any bill would need at least 10 Republican votes, along with every Democratic vote.
But the Biden administration has other priorities. One of its biggest is passing the infrastructure plan, which also faces Republican opposition. The American Jobs Plan , worth $2.3 trillion and then lowered to $1.7 trillion during negotiations, aims to rebuild roads, repair bridges, do away with lead pipes, extend broadband, modernize the country's electric grid and much more. It does not include another stimulus check. In theory, one could be added at a higher overall price tag. Republicans oppose the plan, in part, for its reliance on higher corporate taxes. They would be disinclined to support an even larger corporate tax hike to fund another payment.
The American Families Plan, focusing on childcare, education and paid family leave, would cost another $1.8 trillion. Another stimulus check is not included in the current version of this plan either, though one could theoretically still be added. According to the administration, funding for the American Families Plan would come from higher taxes on wealthy individuals. Republicans will likely oppose these tax increases too.
Plenty of negotiating and possible paring down seems inevitable before either plan comes to a vote. In fact, a bipartisan group of Senators has recently reached a deal that will soon be presented to the President. Biden still faces an uphill battle attracting 10 Republican supporters in the Senate in both cases. As a result, Democrats may very well be anticipating the need to use reconciliation again to push through these broad pieces of legislation. Voters favor using reconciliation to pass both both plans.
Joe Manchin of West Virginia, among the most centrist Democratic Senators, has warned against overusing reconciliation. He is also apparently unwilling to do away with the filibuster, which would lower the number of votes needed to pass legislation to 51. With bipartisanship still a seemingly faint dream, the Biden administration is in a tough spot. They're unlikely to add a fourth stimulus check to either plan, driving up the price tag by hundreds of billions of dollars. They're also unlikely to use reconciliation to pass another stimulus check on its own.
What Other Aid Is Out There?
While a fourth stimulus check is improbable, more direct payments to Americans have already been signed into law. The American Rescue Plan includes an improved Child Tax Credit and extended unemployment benefits.
Under the revised Child Tax Credit, the Internal Revenue Service (IRS) will pay out $3,600 per year for each child up to five years old and $3,000 per year for each child ages six through 17. Payments will be issued automatically on a monthly basis from July to December of 2021, with the remainder to be issued when the recipient files their 2021 taxes. The benefit will not depend on the recipient's current tax burden. In other words, qualifying families will receive the full amount, regardless of how much — or little — they owe in taxes. Payments will start to phase out beyond a $75,000 annual income for individuals and beyond $150,000 for married couples. The more generous credit will apply only for 2021, though Biden has stated his interest in extending it through 2025.
The American Rescue Plan also extended the weekly federal unemployment insurance bonus of $300 through Labor Day. (As mentioned before, half of all states will be ending the additional unemployment in the coming weeks or have already ended it.) Recipients with household incomes below $150,000 will not have to pay taxes on the first $10,200 in unemployment benefits. Those eligible for Pandemic Emergency Unemployment Compensation (PEUC), which covers people who have used up their state benefits, and PUA will also see their benefits extended through early September. PEUC runs out after 53 weeks. PUA expires after 79 weeks. The ARP also added $21.6 billion to the Emergency Rental Assistance Program , which is being distributed to state and local governments, who then assist households.
The far-reaching American Jobs Plan includes some elements not traditionally associated with infrastructure. Those range from $213 billion earmarked for affordable housing to $100 billion set aside for workforce development among underserved groups. The plan also looks to increase pay for caregivers who tend to the elderly and disabled. Each of these efforts would mean more money for those affected. On a broader scale, the plan also has the potential to create many jobs across a wide swath of the economy.
The American Families Plan includes 12 weeks of paid family leave that could reach as high as $4,000 per month, depending on a worker's income. It also boosts the Child and Dependent Care Tax Credit and places a ceiling on the cost of childcare for many families. The plan sets aside $200 billion for universal preschool. In addition to helping working parents pay for childcare, the plan hopes to allow more parents to return to the workforce.
Additional money in people's pockets from the American Jobs Plan and American Families Plan is still hypothetical, of course. Both plans must first find their way through Congress.
First published Monday, June 7, 2021 at 3:11 p.m. ET.
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