Stimulus checks decreased meals shortages and monetary hardship by over 40%

A young child watches residents receive groceries as the Food Bank For New York City partners with the New York Yankees to begin monthly food distribution to needy New Yorkers at Yankee Stadium on May 20, 2021 in New York City.

Michael Loccisano | Getty Images

WASHINGTON – According to a new analysis of the Census Bureau’s data by researchers at the University of Michigan, the two rounds of economic reviews distributed over the past six months appear to have dramatically reduced the financial plight of American households.

Between December and April, the Census’s Household Pulse Survey showed that the rate of food shortages had decreased by more than 40%. Over the same period, financial instability decreased 45% and anxiety and depression decreased 20%.

According to the Pulse data, the biggest improvements in food security and financial stability occurred in the weeks immediately after two bills were signed and economic impact payments were sent to individual IRS bank accounts.

As part of a Covid-19 relief bill, the federal government distributed $ 600 to almost every American adult starting December last year. A second bill, the American Rescue Plan Act, was passed in March with another round of checks, this time for $ 1,400.

Two groups in particular saw the sharpest decreases in hardship in the first four months of this year: adults living with children and households making less than $ 25,000.

One resident sorts her free groceries while another works in the pantry of the Fourth Presbyterian Church amid the ongoing coronavirus disease (COVID-19) pandemic in Boston, Massachusetts, Jan.

Brian Snyder | Reuters

The study’s authors, H. Luke Shaefer and Patrick Cooney of the University of Michigan’s Poverty Solutions Initiative, acknowledge that the economy has improved over this period, which likely helped alleviate the general hardship.

However, they argue that with unemployment still above 6% in April, economic recovery alone is insufficient to explain the dramatic increases in food security, financial stability and mental health that coincided with stimulus payments.

Studies like this one are part of a growing body of research suggesting the direct cash transfers may have helped protect American families and the US economy as a whole from the worst of the pandemic.

Non-binding payments have also proven extremely popular with voters, including Republicans. A March poll found that 79% of voters supported the $ 1,400 stimulus checks; 70% supported an expanded federal unemployment benefit of $ 300 per week and 69% supported an expanded child tax credit.

Starting in July, the Child Allowance will be paid out to families with children in a monthly cash payment: $ 300 for each child under 6 years of age and $ 250 for each child 6 to 17 years old by the end of the year.

These controls alone will bring an estimated 10 million American children above or near the poverty line, according to the Center on Budget and Policy Priorities.

Critics say the payments distributed too much money to people who didn’t really need it and that they had no track of how the dollars were being spent. The total cost of the stimulus checks to taxpayers was approximately $ 391 billion.

However, given the popularity of the stimulus packages and the increasing evidence of their impact on people’s lives, it’s no wonder the White House is eager to bring them to the attention.

President Joe Biden makes remarks on the state of the U.S. economy and the need to pass coronavirus disease (COVID-19) relief legislation while Treasury Secretary Janet Yellen is in the State Dining Room of the White House in Washington, USA on February 5, 2021 , listen.

Kevin Lemarque | Reuters

“President Biden’s economic plan is working and reducing hardship,” was the subject line of an email from the White House Press Office to reporters on Wednesday announcing the results of Shaefer and Cooney’s analysis.

“The benefits of the American bailout – one of the most momentous laws in recent history – have had transformative effects,” it said.

For the Democrats, a lot depends on whether the public will ultimately see Biden’s stimulus package as a success.

The mid-term election in Congress is less than 18 months away, and historical trends suggest Republicans will retake the House and Senate.

The Democrats are also relying on the $ 1.9 trillion relief bill to help the American public sell Biden’s signature domestic investment plans: the $ 2.3 trillion American Jobs Plan and the $ 1.8 trillion US dollar American family plan.

Some of the monthly cash transfers introduced in the Discharge Act also appear in the domestic spending package. For example, the American Families Plan suggests making the extended child tax deduction permanent.

A permanent, refundable child tax credit could reduce the overall child poverty rate in America by about 40%, estimates the Center for Budget and Policy Priorities.

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