by Maurie Backman | Feb. 18, 2021
As the public eagerly awaits a third stimulus payment, data reveals that the last round really helped the economy.
As lawmakers work on legislation to move President Joe Biden's $1.9 trillion coronavirus relief proposal forward, the big question on everyone's minds is none other than "When will stimulus checks arrive?" House Speaker Nancy Pelosi has expressed confidence that a relief bill will be signed into law before March 14. That's when extended unemployment benefits will expire for millions of Americans. Lawmakers are looking to avoid a gap in jobless benefits, and so they're hoping for a speedy turnaround on relief legislation.
In the past, Americans have been privy to two separate rounds of stimulus payments. The first, under the CARES Act, put $1,200 into eligible recipients' bank accounts. The second round that went out starting in late December was stingier, coming in at just $600. But even that smaller stimulus had a huge impact on the economy.
The Census Bureau reports that retail sales climbed 5.3% in January to $568.2 billion after three steady months of declines. That surge also well exceeded economists' estimates of about 1%. Best of all, that uptick was largely fueled by the $600 stimulus checks that went out at the very end of 2020. And that makes a very strong case for a third round of stimulus cash.
Currently, $1,400 stimulus checks are still on the table, though they may get cut off at lower income thresholds than they did in previous rounds. The purpose of that change would be to help ensure that that money goes out to those who really need it. But including higher earners in a third stimulus round could serve another important purpose -- pumping money back into the economy to save and create jobs.
In January, the jobless rate fell to 6.3%. In February of 2020, before the pandemic reached U.S. soil in full force, the unemployment rate was just 3.5%. Clearly, a lot of jobs will need to come back to return to pre-pandemic levels, and a more widespread, generous stimulus round could be the ticket to kickstarting that process.
If Pelosi's timeline holds up, Americans could begin seeing additional stimulus cash hit their wallets by mid to late March. Now that the IRS has a system in place for sending out stimulus payments, all it really needs is approval from Congress to pull the trigger. And while this third stimulus round will likely coincide with the tax-filing season, there's no reason to believe the IRS doesn't have the capacity to process returns and pump out stimulus cash simultaneously.
In fact, if stimulus funds do indeed go out sometime during the latter part of March, they may coincide with tax refunds. Last year, the average filer who received a refund pocketed $2,741 from the IRS. If this year's refund figures are comparable, a lot of filers could be in for a sizeable windfall this spring, and given the number of people who have been struggling financially since the pandemic took hold, that would, indeed, be a very positive thing for individuals and the economy as a whole.
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