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CORONAVIRUS STIMULUS CHECKS

It’s been 9 months since the third stimulus check: could a fourth one still happen in 2022?

The US federal government has sent out three rounds of direct payments to Americans over the pandemic which won’t go away. Could a fourth happen next year?

Update:
The US federal government has sent out three rounds of direct payments to Americans over the pandemic which won’t go away. Could a fourth happen next year?
Samuel CorumAFP

Just when it seems that ground is being gained in the battle against the covid-19 pandemic another setback is experienced. Previous new surges in case numbers pushed lawmakers in Washington to act to help relieve the financial hardship being inflicted on households and the economy.

This led to sweeping legislation that injected massive sums of money into the economy, including three rounds of Economic Impact Payments, or stimulus checks, to around 169 million Americans in the last round. However, the conditions have changed in the nine months since the last stimulus checks for up to $1,400 were approved putting into doubt whether a fourth round could gain traction again.

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Fast spreading Omicron variant raises fears

The latest potential setback in the battle against covid-19 is the emergence of the Omicron variant whose multiple mutations make it much more transmissible, including the potential to evade immunity provided by vaccines. The new variant, which appeared in November, is spreading quickly around the US having already been found in over half the states. However, the Delta variant is still top dog across the nation making up nearly all new cases.

The new surge the US is experiencing began in early November, starting from a point that was relatively high due to a summer surge caused by the Delta variant. New case numbers had fallen by just over half before quickly rising again. This is causing concern about the state of hiring and the impact on the economic recovery.

US Secretary of Labor Marty Walsh told Yahoo Finance Live that he thinks “the psychological impact of the virus,… it'll be measured at some point,… but I definitely think there's an impact of it.”

Economy recovering but still being disrupted by the pandemic

Despite strong growth in the economy, pandemic unemployment benefits ending and plenty of available jobs, many Americans have stayed away from the labor force out of worries for their health and that of their loved ones. The summer surge also delayed or cancelled planned in-person learning at school districts across the nations, keeping parents at home to tend to their children.

Labor force participation is still 1.7 percent below the pre-pandemic rate at 61.6 percent, 17 months into the recovery despite enhanced federal pandemic unemployment benefits ending at the beginning of September. American families, although key hardship indicators have shown improvement since December 2020, are still struggling to put food on the table and pay rent.

Improvements were especially noticeable after the $1,400 stimulus checks started going out in March this year. Households with children saw food hardship drop after the IRS began sending out advance payments of the Child Tax Credit in July. Both measures were part of Democrats’ sweeping covid-19 relief and stimulus measures under the American Rescue Plan.

What are the chances of a fourth stimulus check in 2022?

Despite the continued hardship being experienced across the US by millions of Americans, at this juncture another stimulus check looks unlikely. Economists are forecasting that the US economy will keep growing at a healthy pace through 2022 with JP Morgan chief US economist Michael Feroli expecting job creation to push unemployment down to around three percent. As well as strong GDP growth of three percent, he also thinks that the outlook for wages and inflation appear favorable for next year.

The latter has been a cause of concern and knocking a hole in pocketbooks, especially those who live on a fixed income like Social Security recipients. The Senior Citizens League (TSCL), a non-partisan advocacy group, started a pressure campaign earlier this year to push Congress to send those receiving Social Security additional stimulus money. They are calling for a $1,400 stimulus check, hoping to create momentum to see one delivered in 2022.

Silence in the halls of Congress about any new stimulus checks

Democratic lawmakers in Washington had been pushing for additional stimulus checks for the duration of the pandemic in the spring, but those calls have largely vanished. Passage of President Biden’s Build Back Better agenda has taken front and center stage. The proposals encompassed in the White House's plan were cleaved into two portions, the first of which, the bipartisan infrastructure bill, was enacted in November. The second is in the Senate where the final details are being hammered out but it faces resistance from two centrist Democrats whose votes will be crucial in the evenly split upper chamber.

Senators Joe Manchin and Kyrsten Sinema both have qualms about the size and cost of the legislation. Party members want to salvage some key components of the bill that would put the US on a stronger footing in the long run.

One measure though would continue direct payments to at least some Americans. The enhanced Child Tax Credit for the 2021 fiscal year, along with the advanced payment scheme, could be extended through 2022 if the Build Back Better Act passes.

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