Brutal Reality Check: $1,400 Stimulus Checks Don't Go That Far

U.S. Economy

Brutal Reality Check: $1,400 Stimulus Checks Don't Go That Far

The impact from the coronavirus lockdowns and recession has continued to have negative impacts for a large number of American households.

The Internal Revenue Service and U.S. Treasury have disbursed nearly one hundred sixty million coronavirus stimulus checks to date under the $1.9 trillion American Rescue Plan, but that doesn’t mean that many Americans aren’t struggling financially.

The latest $1,400 stimulus payments, however, were shown to help some lower-income Americans when they started to land in bank accounts in mid-March. According to the latest data compiled by the U.S. Census Bureau from March 17 to 29, the number of Americans who couldn’t cover household expenses during that period fell from 33.8 percent to 28.9 percent.

Moreover, the number of Americans who sometimes or often do not have enough to eat on a weekly basis witnessed a downward trend—10.7 percent to 8.8 percent.

Despite these small successes, that still leaves roughly eighteen million adults who are still regularly going hungry. In fact, that number is still considerably higher compared to before the start of the ongoing pandemic more than a year ago, according to the Center on Budget and Policy Priorities (CBPP).

“While the latest figures are a welcome improvement, they show that many Americans will need more help to enable them to climb out of debt and to return the nation to pre-pandemic levels of hardship—let alone to reach a more equitable recovery that reduces hardship further,” wrote Claire Zippel, a senior research analyst with CBPP. Zippel also added that that an increasing number of Americans are borrowing cash just to meet their basic everyday needs.

CBPP’s research revealed that an estimated fifty million Americans reported using credit cards or loans to cover their expenses and about twenty million individuals admitted that they borrowed money from family or friends.

“While the number of adults borrowing from friends or family is down from nearly twenty-seven million in early March—and a peak of thirty-four million in late December—these twenty million adults are still struggling,” Zippel wrote.

“Thirty-eight percent of adults who borrowed in this way also said their household didn’t have enough to eat,” she added.

Other recently released data seem to be consistent with CBPP’s findings. According to research from the financial services firm TransUnion, four in ten Americans are still continuing to experience a loss of income compared to before the pandemic started more than a year ago.

“38 percent of U.S. consumers said their household income remains negatively impacted due to the COVID-19 pandemic. … While 5 percent of the population has thrived during the pandemic—reporting no income drop and better than planned finances—another 3 percent are devastated by reduced income and don’t think they’ll ever recover,” the report wrote.

“For those whose income has been reduced, 8 percent are resilient saying their finances have fully recovered, and another 27 percent are hopeful saying their finances will recover. Thirty-five percent of all consumers report their financial situation is stable.”

It also found that those who are most negatively affected by the pandemic will use the cash for basic living expenses, such as groceries, utilities, and the mortgage or rent. Roughly one in five adults are “in limbo,” which TransUnion defines as those who have lost income and are unsure how their finances will recover—if at all.

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.