Even though the US economy is gradually reopening, millions of Americans are still suffering financially, with more than 40 million people having filed for unemployment, and with the Fed estimating that the unemployment rate could top 30%. Now, many hopes are being pinned in a second stimulus check that may or may not be forthcoming.
The stimulus checks that the government started sending in April are probably long gone and Americans would love to receive more financial help.
In late March, lawmakers passed the $2.2 trillion CARES Act, which included $290 billion in direct payments. The program allowed $1,200 for people making less than $75,000 and couples making less than $150,000. It also paid $500 per child.
According to new research by a team of economists from four US and European universities, the majority of that COVID county was spent on rent and bill payments followed by food and personal care items.
On the whole, households spent around one-quarter to one-third of their stimulus check money within 10 days of receipt.
Those in the lowest income group, who earned less than $1,000 per month, spent about 40 percent of the checks in the first 10 days. However, people with more than $3,000 in liquidity simply deposited them for a rainy day.
The results did surprise the researchers, as during the 2008 stimulus program passed by the George W Bush administration, which were less than current one, up to 90% of the money was spent on cars.
“Given the size of the 2020 stimulus checks, we might have expected large impacts on categories like automobile spending, electronics, appliances, and home furnishings,” researchers said.
In an early April survey, Bankrate found that less than 30% of Americans believe that one stimulus check wouldn’t help their financial situation for more than a month.
Another survey, this one by WalletHub, found that 84% are really hoping for another stimulus check. The survey also found that nearly 160 million Americans are less than three months away from running out of money--entirely.
Related: COVID-19 Could Spark A Global Food Crisis
So, what is the possibility of another stimulus check? We’ll all likely find out by the end of this month.
In mid-May, the House Democrats introduced a new stimulus bill called the Health and Economic Recovery Omnibus Emergency Solutions Act, or the "HEROES Act". This $3 trillion proposal far exceeds the cost of the $2.2 trillion CARES Act.
The bill would give $2,000 per month to people making under $120,000, plus $2,000 per child for up to three children. Also included — in addition to extended unemployment benefits — is a student loan forgiveness proposal to cancel student loan debt.
The proposal is a starting point for negotiations with the Republican-led Senate, and could be subject to change.
Optimism waned when President Donald Trump started his negotiation bid by calling the legislation “dead on arrival”.
"DOA. Dead on arrival. Of course, Nancy Pelosi knows that,” he told reporters.
Still, Senate Majority Leader Mitch McConnell said last week that he would wait a month to see how the economy reopens before designing another stimulus bill.
Some congressional Republicans have said they don’t want to spend more money and add to the national deficit.
Instead of checks, Republicans are more supportive of the idea of cutting the payroll taxes, the proposal initiated by the Trump administration back in March. However, that wouldn’t be much help to the 40 million people who have lost their jobs, some of whom may never get them back.
By Michael Kern for Safehaven.com
More Top Reads From Safehaven.com: