Stimulus Check Update: Omicron Didn't Wreck the Economy and Likely Won't Lead to a Fourth Stimulus Check

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  • In 2020 and 2021, unemployment was a big driver of stimulus checks.
  • Based on recent data, a fourth check is unlikely.

A healthy economy makes another check less likely.

When the omicron surge first exploded in late 2021, many people were worried that it would lead to a widespread unemployment crisis. After all, with the variant being so transmissible, it was easy to see how businesses might choose to shutter and lay off staff to ride out that wave.

But thankfully, the omicron surge was fairly short-lived in much of the country. Not only that, but it also didn't wreak as much economic havoc as expected. In fact, there were a good 467,000 jobs added to the U.S. economy in January. And while the jobless rate notched upward slightly to 4% last month (compared to 3.9% the month prior), the number of unemployed Americans dropped by 3.7 million from one year prior.

More recently, jobless claims have been coming in on the low side. Last week, total jobless claims came to just 223,000, down from 239,000 the week prior. It was also the third straight week in a row to show a downtick in newly filed unemployment claims.

All of this is very good news for the economy. But from a stimulus perspective, it does make the prospect of a fourth check highly unlikely.

The economy is actually quite strong

Even though the national unemployment situation is fairly stable, it's hard to overlook the fact that living costs have gone up substantially. In January, the Consumer Price Index surged to 7.5%, representing the highest annual gain since 1982.

But while higher living costs are making it difficult for many households to keep up with their bills, inflation alone is unlikely to result in a fourth stimulus round hitting Americans' bank accounts. The reality is that inflation can actually be indicative of a healthy economy, because when the demand for goods exceeds supply, prices go up. And so the fact that there's demand means people have the money to spend.

Furthermore, recent data from the Federal Reserve Bank of New York confirms that household debt grew by $1 trillion on a national level in 2021. That's the biggest annual increase since 2007. And like inflation, higher debt levels are an indication that consumers have money to spend. If they didn't, they wouldn't be making purchases and financing them.

Coping without a fourth stimulus

Not only is a fourth round of stimulus checks unlikely, but at this point, families that relied on the boosted Child Tax Credit in 2021 aren't seeing those monthly payments come in. That's because lawmakers have failed to approve the one-year extension of the boosted credit the Biden administration was hoping for.

The silver lining, however, is that the job market is strong right now. And so those who are really banking on a windfall may instead be in a position to go out and get a higher-paying job, or get an income boost via a second job. Both options are a far better bet than racking up continuous debt and waiting for a fourth stimulus check that may never actually arrive.

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