5 Reasons You Might Never Receive a Stimulus Payment Again
Stimulus payments issued by the government in 2020 and 2021 amid the COVID-19 pandemic helped some Americans through rough financial times and allowed others to build savings accounts. Now that the vaccines and public health measures seemingly have tamed the virus, no more stimulus funds apparently are in the pipeline.
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You might never receive a stimulus payment again — or at least not in the foreseeable future. Here are five reasons why.
Congress Is Unlikely To Approve Further Stimulus Packages
Congress acted swiftly to approve the Coronavirus Aid, Relief and Economic Security (CARES) Act in March 2020, in the early days of the pandemic. Stimulus payments of $1,200 per adult and $500 for children under age 17 were sent to individuals with adjusted gross incomes of less than $75,000 or to married couples filing joint tax returns at $150,000.
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The Tax Relief Act of 2020, passed in December 2020, authorized another $600 per adult and $600 for qualifying children. The American Rescue Plan of March 2021 allowed for $1,400 more for qualifying individuals or $2,800 for couples, plus $1,400 per eligible dependent.
Congress has given no indication, however, that a fourth stimulus check will be forthcoming. Doing so could have negative impacts on a fragile economy.
Unemployment Is Low
When non-essential businesses shut down in the early days of the pandemic, their employees suddenly found themselves out of work. In April 2020, the unemployment rate increased by 10.3 percentage points to 14.7%, according to the U.S. Bureau of Labor Statistics. That was the highest rate and the largest monthly increase since the data began being kept in January 1948.
But, in August 2022, the unemployment rate was 3.7%, just about back to the pre-pandemic rate of 3.5% in February 2020. Unlike during the pandemic, people who want to work largely have jobs. In fact, a labor shortage has ensued.
Stimulus Money Could Continue Labor Shortage
Since businesses both small and large reopened with the lifting of COVID-19 safety measures, they’ve had a hard time getting employees to return to the workplace or recruit new ones. Some employees have left the workforce entirely, some can’t find child care, some can’t afford to commute with high gas prices and some still fear COVID-19.
Senate Majority Leader Mitch McConnell blamed stimulus money that Americans received in 2020 and in the early days of the Biden administration in 2021 for the labor shortage.
“You’ve got a whole lot of people sitting on the sidelines because, frankly, they’re flush for the moment,” McConnell said in July. “What we’ve got to hope is once they run out of money, they’ll start concluding it’s better to work than not to work.”
Stimulus payments were lifelines for some Americans during the pandemic; but, for many others, the money went right into the bank. Moody’s Analytics estimated that, by the end of 2021, Americans had built up $2.6 trillion in “excess savings” — money beyond what would have been saved had there been no pandemic. Part of the reason is that closures and travel restrictions all but halted discretionary spending.
In June, Moody’s reported that Americans had started to withdraw some of that money but still had an estimated $2.5 trillion in excess savings.
Stimulus Checks Can Stimulate Inflation
Inflation — with rising prices this year for groceries, energy, cars and more — has plagued the United States in 2022, but its roots date to 2021, with economists blaming stimulus payments, in part. A report from the Federal Reserve Bank of San Francisco compared the United States to other developed nations and said U.S. inflation outpaced that of other countries without stimulus packages.
“Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021,” the report read.
Some Stimulus Funds Are Available Only to Specific Groups
With the passage of the CARES Act in March 2020 and the American Rescue Plan in March 2021, the federal government passed on about $500 billion to state, local and tribal governments. Cities and counties also shared in the American Rescue Plan funds. The money was meant to help local governments and their residents recover from the pandemic.
Now, some states fund themselves with excess cash; in 21 states, funds are being shared with residents. In California, the Middle Class Tax Refund is available only to those who meet income and residency requirements.
New York state sent property tax relief checks to about 2.5 million eligible homeowners this year. Only homeowners who met certain income qualifications received checks. In another state initiative, about 2 million eligible New Yorkers will receive $270 payments if they qualified for the Empire State Child Credit or the Earned Income Credit on their 2021 tax returns.
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This article originally appeared on GOBankingRates.com: 5 Reasons You Might Never Receive a Stimulus Payment Again
