Fourth stimulus check summary: 28 May 2021
US stimulus checks live updates | Friday 28 May 2021
- President Biden proposes $6 trillion budget to Congress for 2022 fiscal year (what is in the proposal?)
- IRS issue another 1.8 million 'plus-up' stimulus checks this week, taking total for the third round of payments to 167 million
- Fourth stimulus check excluded from the new budget proposal (read more)
- Global house prices rise on back of stimulus strategies
- Florida ending $300 weekly unemployment booster in June (full story)
- Child and Dependent Care Credit 2021....all you need to know
- Payments for the 2021 Child Tax Credit are around the corner (full story)
- The IRS tax return deadline of 17 May has now passed; however some states have issued extensions (read more)
- California sends out $600/$1,200 stimulus checks as part of the Golden State Stimulus scheme
- You can track your third stimulus check by using the IRS' online Get My Payment portal
Keep up to date with the latest US and global vaccine news with our covid-19 vaccine live feed
Take a look at some of our related articles:
Over 1.2 million stimulus checks are still unclaimed
A new report from the IRS has found that there are over 1.2 million physical stimulus checks from the first round of payments that are yet to be cashed. While most recipients got their payment in the form of a direct deposit into a bank account, if the IRS did not have the relevant bank details on file that money may well have been sent as a physical check.
To see if you have an outstanding payment, and to claim it if you do, check out the handy guide here...
What is the Homeowner Assistance Fund?
The Homeowner Assistance Fund (HAF) is part of the 2021 American Rescue Plan and was brought in to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020. Funds from the HAF may be used for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes. The law prioritizes funds for homeowners who have experienced the greatest hardships, leveraging local and national income indicators to maximize the impact.
Unemployment claims have almost halved - Biden
President Biden posted a video on his Twitter account on Saturday in which he stated that when he came to office, the average figure for jobless claims stood at 830,000. According to a press release issued by the Department of Labor on Thursday, seasonally-adjusted number of unemployment claims fell to 406,000 for the week ending 22 May, a drop of 38,000.
The four-week moving average was 458,750, a decrease of 46,000 from the previous week's unrevised average of 504,750 - the lowest level for this average since 14 March 14 2020 when it was 225,500.
Consumer spending in the US up by 0.5% in April
Consumer spending in the United States rose by 0.5% in April - a slowdown compared to the 4.7% increase in March which has been boosted by billions of dollars in individual stimulus checks, the US Bureau of Economic Analysis reported on Friday.
Personal consumption expenditure (PCE) increased by $80.3 billion (0.5%) but personal income decreased $3.21 trillion (13.1%) and disposable personal income (DPI) decreased $3.22 trillion (14.6%) during the same period. The April gain was led by a 1.1% rise in spending on services, the sector that covers airline travel, hotels and restaurants - areas that were seriously affected by the pandemic.
The IRS continues to make payments as part of the third round of stimulus checks, and will do so for the remainder of 2021. As they work their way through a backlog of tax return informaiton from the 2020 they are finding new eligible recipients, and issuing 'plus-up' stimulus checks to some who were underpaid.
If you feel like you are still owed a stimulus check from the third round of payments it is not too late to get the money. Here's everything you need to know about the latest payments...
Dem Senator criticises GOP reluctance on Child Tax Credit
Throughout the pandemic Sen. Michael Bennet has been a strong supporter of providing financial support for struggling families, and is particularly keen to see the new Child Tax Credit extended. The initial programme is only funded for 12 months and the GOP have pushed back on efforts to extend it further.
Over 1.2 million stimulus checks are still unclaimed
A new report from the IRS has found that there are over 1.2 million physical stimulus checks from the first round of payments that are yet to be cashed. While most recipients got their payment in the form of a direct deposit into a bank account, if the IRS did not have the relevent bank details on file that money may well have been sent as a physical check.
To see if you have an outstanding payment, and to claim it if you do, check out the handy guide here...
One of the key features of the new Child Tax Credit is that the provision will be made available in the form of a monthly direct payment, rather than as a single tax credit at the end of the year. This will suit many household as the regular payments make budgeting easier and provides a consistent flow of support.
However for some this may not work, perhaps because they typically rely on the post-tax year credit to cover their outstanding tax bill. If you would like to opt out of the Child Tax Credit monthly payments, you can! Here's all the information you need to know...
Stimulus check spending nears $900 billion
Since the start of the pandemic the federal government has undertaken a historic spell of spending in response to the economic chaos of the past 15 months. One of the main forms of relief offered throughout that time has been the three rounds of stimulus checks, which provided a direct cash payments to eligible Americans.
As the IRS continues to distribute the thired round of stimulus checks, the total amount spent on them by the federal government closes in on $900 billion. Another 1.2 million people received them this week and they will continue on a weekly basis for the rest of 2021.
Public support for Child Tax Credit expansion
Although the first payments as part of the new Child Tax Credit do not begin until 15 July there is clear support for the programme across the country. The new CTC will provide monthly direct payments, but the existing funding will only last for one year.
Biden's American Families Plan would see that extended to the end of 2025 if passed, but the President is facing major push-back from the Republicans on the proposal.
Wondering how many batches of the third round of stimulus checks are still yet to go out? Well earlier this week the IRS posted the latest figures on the distribution of the direct payments, confirming that over 167 million Americans have now received their money.
However the IRS will continue making the payments throughout the year to ensure that everyone receives their full stimulus check entitlement once all the tax returns have been processed. Here's how many have gone out so far...
Child Tax Credit will have postive health benefits too
The White House has billed the new-look Child Tax Credit as a generational change for American families, and further research is showing how far-reaching that support could prove to be. This Center on Budget and Policy Priorities report, shared here by Rep. Dwight Evans, makes clear that children's health often reflects their economic circumstances.
The report reads: "People with higher incomes can more easily afford to meet the full range of their children’s needs, from nutritious food and quality housing to medicine, transportation to the pediatrician, and healthy recreational activities."
How was the third stimulus check spent?
We're now over two months since the third round of stimulus checks began distribution and we can now see how that money was spent. It appears that the cash influx spurred a dramatic increase in consumer spending, coming around the same time that covid-19 restrictions were loosened in many states. Consumer spending represents over half of the US' economic activity so the marked increase may strengthen calls for a fourth stimulus check.
There was no mention of a fourth stimulus check in Biden's new budget proposal, but that does not mean that there are no plans to implement another round of the direct payments. In Congress there are a number of Democratic lawmakers who have publically given their support to another stimulus check.
Some want another single round of direct payments, but many are in favour of a new system which would see payments go out on a monthly basis. These 'recurring stimulus checks' would be costly, but there is a clear appetite for them in Congress.
Biden's budget would cover the cost of extended Child Tax Credit payments
The budget proposed by President Biden will see a massive $6 trillion of federal spending utilised to help the US recover from the pandemic, much of whcih will go towards funding two of his major legislative priorities. The American Families Plan and the American Jobs Plan were first unveiled last month and are slated to cost a combined $4 trillion.
Included in the American Families Plan is funding to extend the new Child Tax Credit through to the end of 2025. The overhaul of the Child Tax Credit system was one of the main talking points from the proposal, which will see monthly payments sent out to eligible families.
Consumer spending slows after stimulus check boost
March saw an enormous increases in consumer spending as the third round of sitmulus checks, coupled with the easing covid-19 restrictions, sent shoppers back to stores across the country. However after that initial rise it seems like the impact of the $1,400 stimulus checks wore off in April and returned to a modest increase.
Some supporters of the recurring direct payments argue that this would help to avoid a similar 'boom and bust' situation if a fourth stimulus check is agreed. The idea is that a more stable income would allow both consumers and businesses to better plan their spending.
Child Tax Credit monthly payments until the end of 2021
The IRS confirm that the monthly direct payments, worth up to $300 per child, will continue until the end of 2021 at least. The regular payments are essentially an advance of the annual tax credit that parents have been eligible for previously, but is now a much more generous system.
The new programme will be funded for one year initially, but Biden's new budget includes provision to extend it to the end of 2025 through the American Families Plan.
Stimulus more effective when interest rates are at zero
A paper from the Federal Reserve Bank of San Francisco looked at 25 years of fiscal policy in Japan, a period in which the country saw four boom-and-bust cycles. Japan was useful in that it has maintained it policy rate at or near zero lower bound (ZLB) since 1995.
The paper states “We find that the stimulus effect of government spending is significantly larger and much more persistent under the ZLB than in the normal period. We also find that, in a sustained ZLB environment, fiscal stimulus is especially effective during recessions.”
College surprises students using stimulus money to pay off tuition debt
Simmons College a private historically black college in Louisville, Kentucky made a surprise move on Thursday. Normally student cringe when they receive an envelope containing a tuition bill, not this time. Inside the tuition bills read "Paid in Full." The college used around $430,000 of funds from a recent $2.7 million allocation from the federal government for HBCUs.
Biden will lay out his six trillion-dollar budget proposal for 2022 on Friday which seeks to put the US economy on better financial footing over time.
The budget proposal put forth by the White House is said to include spending for policies initiatives that President Biden has been laying out over his four months in office. This includes investment in infrastructure to improve transportation and fight climate change along with funding to rebuild the American middle class.
Biden has fun at the expense of shameless GOP lawmakers
President Joe Biden on Thursday took a jab at GOP lawmakers who have been touting parts of the American Rescue Plan that benefit their constituents despite having voted against the law. Not a single Republican in Congress voted for the covid-19 relief bill which included a third round of stimulus checks and much more when it passed in March.
Economists worry that this amount of debt, which has reached the highest record ever record at 1.5 trillion dollars, is a drag on the economy. With such high levels of debt being owed, many experts worry that it could hinder the solid economic recovery needed to get the country to pre-pandemic levels.
Since his support on forgiving student debt was made public earlier this year, Biden seems to have cooled on the issue, while members of his party haven't.
I'm happy they know that it's benefited their constituents -- that's OK with me. But if you're going to try and take credit for what you've done, don't get in the way of what we still need to do.
The State of California passed a $9.6 billion relief package back in February 2021 to provide assistance to residents struggling with the effects of the coronavirus pandemic. Among the measures was a California-wide equivalent of the nationwide federal stimulus checks. The California payments are known as Golden State Stimulus checks and are being paid out by the state’s Franchise Tax Board; they are worth $600 or $1,200 depending on eligibility.
Spending slowed in April but growth expected to continue on the back of stimulus
AP - When compared with the 4.7% surge in spending in March, the 0.5% in April looks weak but it was evidence that consumers are driving a strengthening recovery from the pandemic recession. Personal incomes were down, but this was expected in the month after the bulk of Americans received a one-time stimulus check which had fueled spending.
A more worrying number came from inflation which hit 3.6% for the 12 months ending in April far above the Fed’s 2% target for inflation. However, there have been spikes in some goods and services due to bottlenecks in the supply change disrupted during the pandemic. Treasury Secretary Janet Yellen told a House committee that the economy could endure a “bumpy” period with high inflation until the end of the year.
The economy experienced robust growth in the first quarter by government estimates and it is expected to continue in the second quarter. The outlook for the second half of the year is also rosy with trillions of dollars in government stimulus still coming. Many economists foresee growth for 2021 as a whole achieving its fastest pace since at least 1984.
Ohio held the first of five weekly drawings this week, rewarding residents of the state that are vaccinated using money from the stimulus funds.
A 22-year-old aerospace engineer who recently moved to the Cincinnati area becomes the first to win $1 million in the Ohio Vax-a-Million lottery for vaccinated adults. Meanwhile in the drawing for teenagers, a lucky fourteen-year-old from the Dayton area got a four-year scholarship to any Ohio college of his choice.
Lack of child care hinders job seeking
There has been a lot of talk about stimulus checks and generous unemployment benefits causing a shortage of people willing to go out and look for a job. Some states are trying to combat the problem by ending participation in federal unemployment insurance programs, 23 states have decided to do so.
However, for many a much more pressing issue is holding them back from seeking a job, a lack of child care. The industry was devastated by the pandemic and is just beginning to claw its way back. This is the first of four major reasons Best Buy CEO Corie Barry told CNN her company is see a dip in job applications.
Frustration growing as tax refunds for those who collected unemployment compensation are delayed
Millions of Americans who received unemployment benefits in 2020 are awaiting their tax refund as the IRS adjusts their tax returns to include tax break. The IRS announced earlier this month that the agency had begun the process of adjusting tax returns for those who had claimed unemployment benefits in 2020. Payments started going out to those taxpayers and the agency will continue to send payments weekly through the summer.
Two weeks later though many still haven’t seen a refund deposit appear in their account, causing frustration among those who are depending on that money. The situation has led one of those individuals to create the @UnemploymentTax Twitter account to keep tabs on when and if other taxpayers received their refunds. Matt Blackman, a Florida resident who is himself waiting for a refund has been in touch with hundreds of others awaiting their federal refund, some of whom have now received one from their state government.
Stimulus support and vaccine rollout were two of the key components to President Biden's plan to escape the grasp of this pandemic.
Keep up to date with the latest national vaccine news and global developments, as the US surpasses the milestone of having 50% of the adult population vaccinated.
Should creating crypto tokens be taxed
Cryptocurrencies have seen their value go through the roof during the pandemic. Many people began investing in the market with time on their hands while locked up in their houses. Additionally, those that could spare their stimulus check could essentially make a risk-free investment. Many however will be finding out that cryptocurrencies can be taxed like an investment.
One cryptocurrency investor, Joshua Jarrett, has filed suit against the IRS. His suit claims that taxing newly created tokens as income is tantamount to taxing a painter for artwork that has just been painted but not sold.
"Like any property, cryptocurrency tokens can be income when they're received as payment or compensation,” said Jarrett in a press release announcing the suit. “But these newly created tokens are like crops harvested by a farmer—which are not taxed until they are sold."
IRS correctly sent 98% of $1,200 stimulus checks
The first round of stimulus payments were approved under the CARES Act in March 2020. The IRS began sending checks out based on the information the agency had on taxpayers from 2018 and 2019 tax returns. In total roughly 168 million Economic Impact Payments worth up to $1,200 per person were sent to households, at a total cost of $280 billion by the end of 2020.
Due to the speed with which the checks were meant to be sent out some mistakes were made. A recent report from the Treasury found that, during that first round of stimulus checks, an estimated 4.5 million people were mistakenly sent a direct payment.
Nearly half of those mistaken payments went to a recipient who had passed away, of which nearly 60,000 were voluntarily returned to the Treasury.
The report also found that over 700,000 stimulus checks amounting to $944 million have been returned or rejected by banks.
One of the most beneficial features of the American Rescue Plan for American taxpayers with children is the expanded Child Tax Credit. Depending on the age of your children you could receive up to $3,600 for each child.
The Child Tax Credit has been around for decades, but with the push to fight inequality and poverty nearly ninety percent of families will now be able to take advantage of the credit’s revamp. Gone is the earnings floor that denied the credit to lower income households causing some to call the expanded and enhanced credit a step toward universal basic income.
The IRS is preparing a new online portal where parents can choose whether to receive advance payments or hold off until they file taxes in 2022.
GOP lawmakers infrastructure counteroffer lacks White House priorities
A group of Senate Republicans has presented a $928 billion infrastructure proposal to counter President Biden's plan. The new offer is a significant increase on their previous plan to spend $568 billion. Republicans framed the new offer as evidence that a bipartisan deal is possible.
There is still a yawning gap between the two sides but the White House called the offer “constructive.” The new offer could keep negotiations going past President Biden’s deadline of Memorial Day for determining whether to continue negotiations or go ahead without GOP support. However, the counteroffer lacks funding for key elements of the President’s proposal. One priority is the Child Tax Credit expansion.
President Biden chopped over half a trillion from his original $2.2 trillion proposal. The GOP Senators would pay for their plan by repurposing funds Congress has already approved, mainly from unspent money meant for covid-19 relief. The White House is cautioning against this move.
California dreaming: more stimulus possible
California's state legislature is weighing several new budget proposals to provide financial help to residents suffering from the covid-19 pandemic, which could include rent relief, state stimulus checks, and business grants.
Earlier this month, Democratic Gov. Gavin Newsom unveiled more than a dozen proposals as part of his $100 billion California Comeback Plan. The plan is Newsom's final budget proposal and came amid a Republican-led effort to have him recalled from office.
"California's economic recovery will leave nobody behind, that's why we're implementing the nation's largest state tax rebate and small business relief programs in history, on top of unprecedented investments we're making to address California's most persistent challenges," Newsom said on 14 May.
Stimulus driving global optimism
RMB's research offering spans across the fixed income, currency and credit markets to offer strategic insight to our clients across multiple sectors and markets.
Here, in their latest podcast, they discuss the impact of the stimulus investments that are being made.
Biden stimulus for smuggling cartels - Paxton
Despite what DHS Secretary Alejandro Mayorkas told Congress on Wednesday, the border is not closed, and there are almost triple the number of illegals coming across the border than there were a year ago, Texas Attorney General Ken Paxton said Thursday.
“You and I were down there a month ago, and I just was in Laredo two days ago. It’s nowhere near closed. The numbers are almost triple those coming across that they were just a year ago. So we know the border is not closed. It is a massive influx of immigrants that have been invited here and really to the benefit of the cartels,” Paxton told Fox Business’s “Mornings with Maria Bartiromo.”
“As you saw, the cartels are the really the only ones absolutely benefiting. They are charging in Laredo actually more than they’re charging where you and I were - about double, about $8,000 per person. The numbers are amazing, and the incentives that Biden is giving the cartels to bring more people, it's just hard to believe,” he said.
Full story below.
US stimulus continues to impact Asian stock
Asian stocks put global equities on course for a seventh day of gains on Friday as investors bet the US will lead the world out of the covid-19 pandemic, with the focus turning to a multi-trillion dollar spending boost by the Biden administration.
Tokyo led the advance, with the Nikkei (.N225) jumping 1.9% early in the session. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.3%, hitting its highest level this month, though Chinese blue chips (.CSI300) slipped 0.1% just after the open.
The MSCI world equity index (.MIWD00000PUS) added 0.1% to 709.71, nearing the all-time closing high of 710.36 set on May 7.
US stocks were also poised for further gains after the S&P 500's (.SPX) 0.1% rise overnight, with futures pointing to a 0.3% increase at the open.
On Thursday, data showed the number of Americans filing new claims for unemployment benefits dropped to the lowest since mid-March 2020, with companies desperate for workers to meet surging demand unleashed by a rapidly reopening economy.
Child Tax Credit: 'a huge difference to working families'
Former Congressman John Delaney has spoke to Yahoo Finance about the impact that the reformed Child Tax Credit could have on families hit by the pandemic. The new programme is set to begin from 15 July with a minimum of six months' worth of monthly direct payments.
For more information on how to get your payments, check out How to use IRS online portals for 2021 Child Tax Credit
Any new stimulus bill would face an uphill battle in Congress. The Democrats hold both chambers by the slimmest of margins and any defections would doom President Biden’s Build Back Better agenda. Republican support for new stimulus checks would be highly unlikely with many blaming stimulus checks and weekly federal pandemic unemployment booster payments for a shortage of workers in low wage jobs.
The most difficult battle would be in the Senate where Democrats would need the support of at least 10 GOP Senators to avoid a filibuster. The White House has been negotiating with Republican Senators to pass his infrastructure bill with a bipartisan vote, but there remains a yawning gap between the two sides, even after the most recent counteroffer from the GOP.
Greg Heilman digs into the detail of potential further stimulus payments.
Child Tax Credit: how to get new monthly payments
The IRS has confirmed that the new online portal will be ready in time for the first round of Child Tax Credit direct payments to be distributed from 15 July.
The federal authority had been tasked with setting up the new system while overseeing a busy tax season and distributing the third round of stimulus checks.
If you're not sure how much you will get in the new-look Child Tax Credit system, check out this handy guide...
Republicans skip Child Tax Credits in their infrastructure proposal
Since unveiling his American Jobs Plan last month, President Biden has hosted bipartisan meetings in the White House as he attempts to find a compromise with the Republicans.
However while Biden's infrastructure proposal includes spending for Child Tax Credit and improving broadband connectivity, the GOP counter-proposal focuses more on tradition infrastructure, like bridges and roads.
Inequality rises as stimulus check boost wears off
Over two months since the third round of stimulus checks was first distributed and it appears that the benefits are beginning to wear off for recipients. Initially the direct payemnts were credited with a historic increase in average household income for low- and middle-earning households.
A report published by Morning Consult and Axios found that: "Economic inequality increased in May as the impact of stimulus checks on households' finances started to wear off faster than job growth could produce sustainable incomes for low- and middle-income adults."
President Biden is set to announce a proposed $6 trillion budget today as he presses on with an ambitious economic agenda aimed at fuelling the United States’ post-pandemic recovery and reshaping American society.
The New York Times reports that Biden’s first budget request to Congress will see total spending to rise to $8.2 trillion by 2031, with deficits running above $1.3 trillion across the next decade.
Throughout the first few months of his presidency Biden has appeared intent on following a more progressive agenda than many were expecting and it is thought that the budgetary increase will be used to fund two large-scale relief bills that his administration has recently proposed.
Maite Knorr-Evans brings you all the details.
US stimulus checks live updates: welcome
Welcome to our live US stimulus checks blog for Friday 28 May.
Throughout the day, we’ll be bringing you all the latest information on a possible fourth direct payment as well as updates on the third stimulus check, which the IRS has been distributing since the $1.9tn American Rescue Plan was signed into law in early March.