Americans are hurting. The impact of the ongoing pandemic has continued to create economic disruption for many segments of the economy. The leisure and travel industry, food services, museums and sports stadiums and their employees have all been affected.
Thirteen million Americans remain out of work as a direct result of the pandemic. Another two million have been hit with reduced work hours.
In April of 2020, most Americans eligible for a stimulus check received $1,200 and in December of 2020, those eligible received an additional $600. There was an increase in consumer spending in January of 5.3 percent, but the economy still requires more stimulus, according to Fed Chairman Jerome Powell.
A third round of stimulus checks is planned to include a $1,400 payment for qualifying individuals. The eligibility requirements include citizenship, number of dependents and income caps. Those individuals with incomes up to $75,000 or married couples with incomes up to $150,000, should be eligible depending on what the final bill looks like.
The payments are part of a proposed $1.9 trillion COVID relief package.
In the new bill, eligible dependents could mean another $1,400 each. Theoretically, a family of four who met the new bill’s eligibility standards could potentially receive a check for $5,600.
The bill would also include an additional payment of $400 weekly through August 29 for those unemployed. This amount is in addition to state unemployment. Some unemployment benefits run out in March, so this benefit would extend payments through August.
There will be some pushback to some of the provisions in the bill that don’t directly address stimulus checks or unemployment assistance.
The current package includes a large portion of funds that don’t directly address people displaced because of the pandemic or the expenses incurred in distributing the vaccines. Much of the package goes to funding state and city governments, the National Endowment for the Arts, union pensions, a bridge project in New York and to universities.
With a growing national debt, these pet project provisions will be debated.
The first and second rounds of stimulus checks helped people who were out of work replace lost income. Many Americans have reported burning through emergency savings, so another round of payments will help offset further erosion of savings.
Stimulus and Improving Employment Outlook
In the week ending February 19, unemployment claims were 730,000, the biggest drop since last summer. Unemployment claims had peeked in January above 900,000. The only caveat in the optimistic numbers is that Ohio and California accounted for three-quarters of the decrease and both states have faced high numbers of fraudulent claims. Ohio is implementing new fraud detection measures.
Also, claims in Texas fell at the same time that the state was suffering with a major winter storm, affecting the ability of many Texans to file claims.
Last spring saw a peak of nearly seven million. Still, many economists see recovery in the second half of the year as more Americans become vaccinated and there is more immunity. Those economists surveyed by the Wall Street Journal anticipate employers adding 4.8 million jobs before the end of the year.
Combined with more consumer spending resulting from the stimulus checks, the economy should improve.