Stimulus Check Update: Here's How $850 Billion in Direct Payments Have Helped Americans

Americans have done a lot with their stimulus checks.

Lawmakers in Washington D.C. have authorized a total of three stimulus check payments since the start of the coronavirus pandemic.

The first check provided $1,200 per eligible adult and $500 per dependent child. The second provided $600 per adult and child dependent. Both of those checks were signed into law by the Trump administration in 2020. And the third, signed into law by President Joe Biden as part of the American Rescue Plan Act, provided $1,400 for adults and all eligible dependents (not restricted to children).

Altogether, these three separate payments add up to around $850 billion in direct cash payments delivered to American households, according to the Economic Security Project. That includes $480 billion to households whose incomes are in the bottom 60%. And it means that the average household received more than $5,500 in stimulus funds.

The big question is, has this money actually helped Americans? The Economic Security Project has collected a persuasive amount of data suggesting that it has.

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Stimulus payments have had a profound impact on American families

It may not come as a surprise that giving people money tends to reduce poverty -- which is exactly what happened when stimulus payments started to hit people's bank accounts.

In large part because of these stimulus checks, poverty rates actually declined when the coronavirus-driven recession started and the CARES Act payments were sent out. That's shocking as unemployment reached record highs and millions found themselves with no ability to look for work.

Unfortunately, the funds from the initial payment tended to be spent within around two to three months by the families who needed it most -- with the money largely being used for necessities. And when the money was gone near the start of the summer, around 8 million people reportedly fell back into poverty.

The second stimulus check for $600 also had a positive impact, with a reported drop in food insecurity following the payment of the checks -- particularly for households earning less than $50,000. Again, this effect was temporary, but still profoundly important for families whose stimulus money helped them put food on the table.

The American Rescue Plan Act, which authorized the most recent round of stimulus checks, is expected to have a longer-term impact on reducing poverty rates as it doesn't just include a one-time stimulus payment. It authorizes ongoing payments of up to $3,600 to eligible families with young children up to age six or up to $3,000 for families with older children with the boosted Child Tax Credit.

These payments alone are expected to keep 11 million people out of poverty -- at least while they continue through the end of 2021.

Should lawmakers authorize more stimulus checks?

Because the first three checks have been a major source of financial relief to so many American families, the Economic Security Institute believes more stimulus funds are needed as people continue to cope with the pandemic's effects.

The Institute is calling for not one but two additional checks, which would mean a fourth and fifth stimulus payment would be delivered.

The likelihood of this happening isn't very good. In fact, odds are against even a fourth stimulus check as there is no bipartisan support for one and Democrats have moved on to other legislative priorities.

Still, while another direct payment probably won't occur any time soon, lawmakers should take note of the fact that the funds they delivered undoubtedly made an impact.

The significant reduction in poverty is an important data point as they craft further legislation to address any ongoing pandemic relief efforts that may be necessary over time -- especially if emerging variants of the virus continue to necessitate strict precautions that can impact people's ability to work and earn a living.