Stimulus Checks, Child Tax Credit Had Historic Impact on Leveling Economic Playing Field — 7 Key Takeaways from New Treasury Report
Economic stimulus programs rolled out during the COVID-19 pandemic contributed to “the most equitable recovery in recent history,” according to a new report from the U.S. Department of the Treasury. This is especially true in terms of their contributions to the financial well-being of minority groups.
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The report, released on Oct. 23, included new Treasury Department research alongside new data released by the Federal Reserve Board. Among its findings was that programs initiated by the Biden administration “helped to thwart the worst economic outcomes anticipated from the COVID shock for Black and Hispanic families.” It also found that across various economic indicators, the financial health of Black and Hispanic families has “remained strong” relative to recoveries in recent history.
“This report shows that, as the Biden administration policies have driven a historic economic recovery, we’ve also been building the economy we need for the long term — one that allows all communities to reach their economic potential,” Deputy Treasury Secretary Wally Adeyemo said in a news release.
According to the report, President Joe Biden’s 2021 American Rescue Plan “effectively delivered resources and aid” to historically underserved communities, which helped the economy recover more quickly than in previous downturns.
It’s useful to keep in mind that the report was prepared ahead of an election year in which Biden seeks another term. Even so, it includes plenty of data to support its claims that the nation experienced a “historically equitable recovery” from the pandemic.
The federal government sent out $500 billion in stimulus checks as part of the American Rescue Plan, with eligible individuals getting payments of up to $1,400 per person. That represented the third (and largest) round of stimulus checks after the Trump administration oversaw the first and second stimulus rounds.
The American Rescue Plan also expanded the child tax credit, earned income tax credit and child and dependent care tax credit, each of which helped lower the nation’s child poverty rate. In addition, small businesses received emergency grants and minority-owned businesses were eligible for aid through the small business opportunity fund.
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Here are seven key takeaways from the Treasury Department report:
From 2019 to 2022, median wealth (adjusted for inflation) for Black, Hispanic and white families rose 60%, 47% and 31%, respectively. These three-year gains were “some of the largest” in the history of the Survey of Consumer Finances and stood “in stark contrast” to the three years following the onset of the Great Recession when real wealth fell for all three groups.
Within 20 months after the COVID recession peak, both Black and Hispanic unemployment rates were lower than they were at the same time in previous recoveries and have stayed lower through the most recent data.
The employment rate gaps between different ethnic groups have “closed substantially” and are now near their historic lows.
During the COVID recession and recovery, the three-year growth rate of real earnings for full-time workers was 4% for Black workers and 2.4% for Hispanic workers.
Foreclosure rates have “remained low” in the COVID recession and recovery in contrast to the Great Recession when they spiked.
Between 2019 and 2022, Black, Hispanic and white homeownership rates rose 2.9, 1.2 and 1.1 percentage points, respectively. This happened despite interest rate increases that have contributed to record-high mortgage rates. In comparison, homeownership rates fell over the Great Recession and rose by less for Black and Hispanic households in the 2001 recession and recovery.
Black and Hispanic rates of business ownership have risen by 6.2 and 2.8 percentage points, respectively, to their highest recorded readings at 11% and 9.8%. These were the largest increases seen in the history of the Survey of Consumer Finances.
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