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Third stimulus check: When could you get a $1,400 check?

Published on January 24, 2021 10:59 PM
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ECONOMY Third stimulus checks
President Joe Biden's $1.9 trillion coronavirus relief plan proposes a third round of stimulus checks of $1,400 for most Americans. Yet while that could extend a helping hand to millions of households still suffering from the pandemic's economic fallout, it could be months until the payments arrive, analysts say.

The price tag for the relief package, called the American Rescue Plan, is likely to face pushback from Republican lawmakers, who last year resisted Democratic efforts to pass a $2 trillion bill. Heights Securities analyst Hunter Hammond expects the ultimate package to be trimmed to $1 trillion or $1.5 trillion. But most analysts think lawmakers on both sides of the aisle will back the $1,400 direct payments, which economists view as a lifeline for many cash-strapped workers who lost their jobs or have seen their income plummet during the pandemic.

Support for another stimulus package may gain steam given several developments that point to widening economic distress as the pandemic worsens, according to Ed Mills, an analyst with investment bank Raymond James. A weaker outlook for the labor market, with a bigger-than-expected 1 million jobless claims during the first week of January, as well as record number of COVID-19 infections and deaths, could push lawmakers to support Mr. Biden's plan for additional stimulus, analysts say.

"The market is back to an expectation that more fiscal stimulus is all but inevitable in the early days of the Biden administration, with the release of a $1.9 trillion 'American Rescue Plan,'" Mills said in a report on January 15. "While we anticipate that additional fiscal support remains likely, the timing and scope are very much in flux."

Chief among the issues are whether Republican lawmakers would support the package, or if the Biden administration would eventually tackle its spending priorities by breaking apart the spending proposals into two bills, analysts say.

Janet Yellen, President Joe Biden's choice as Treasury secretary, said on January 19 that the incoming administration would focus on winning quick passage of its $1.9 trillion pandemic relief plan. Yellen argued that additional stimulus, including Mr. Biden's proposal for a $15 minimum wage, were necessary to prevent economic "scarring due to this pandemic."

The plan to provide more direct aid to low- and middle-class households could help lift GDP by 0.7%, although other measures in the bill — such as a higher minimum wage and aid to states — could boost GDP growth by 1.5%, according to a January 18 report from Oxford Economics chief U.S. economist Gregory Daco.

Here's what analysts are predicting about the $1,400 checks and other spending proposals.

Are the $1,400 checks a done deal? Very likely, according to Wall Street and political analysts. There is growing support among Republican lawmakers for additional stimulus directed toward low- and middle-income households, with the latest effort to pass $2,000 stimulus checks winning some bipartisan support.

There's an 85% chance a scaled-down package will be passed in the first three months of 2021, predicts Height Securities' Hammond. Because of the ongoing support for additional direct aid to households, checks are likely to be included in that smaller package.

"We believe there is support for a smaller package that includes the $1,400 checks, more health care funding, support for small businesses, and some state and local aid," Mills said.

When would I get a $1,400 check? Alec Phillips, chief U.S. political economist with Goldman Sachs, thinks the package could be passed in mid-February to mid-March. After the relief bill passes Congress, it must be signed by the president. After that, the IRS would distribute funds through direct deposit, mailed checks and prepaid debit cards.

It's likely that the House will vote on Mr. Biden's American Rescue Plan in the first week of February, according to Height Securities' Hammond in a January 22 research note.

In the first stimulus payments in April 2020, which directed $1,200 to eligible adults as well as $500 per child, it typically took two weeks to several months for payments to reach people. The second round of checks, which sent $600 to each eligible adult and child, required about a week for the funds to arrive via direct deposit.

But in some cases people experienced delays in receiving the money due to problems with their account information. President Biden will sign an order on January 22 that will direct the Treasury to streamline the delivery of stimulus checks for those who have not yet received their direct payments.

Based on previous stimulus money payouts, and assuming Congress passes a new relief bill by mid-February, the checks could arrive in bank accounts by late February, although that would likely be a best-case scenario. If a package is passed by the end of March, people might get their checks by early April.

The caveat is these time frames assume that at least 10 Republican Senators support the package, allowing for 60 votes in the Senate to overcome a possible filibuster and pass the bill, analysts note. If the Biden administration cannot muster enough GOP support, stimulus backers could move to pass it under a process known as budget reconciliation. That parliamentary maneuver only requires a majority vote for legislation to become law, though it can delay passage.

Would more people qualify for a check? Millions more Americans could qualify for a check if Mr. Biden's plan is passed as he envisions it. One of his goals is to expand the payments to adult dependents, who were excluded from the first two rounds of checks.

That exclusion meant college students who are claimed as dependents on their parents' taxes, as well as disabled adults who are claimed as dependents, didn't qualify for checks. Because the two previous relief checks defined a child as someone who was younger than 17 years old, they also excluded high school students who are 17 or 18. Mr. Biden's plan would also extend the payments to older teenagers.

Do Americans really need the money? Signs point to millions of households facing rising financial hardship as the pandemic worsens, which is causing some businesses to lay off staff and cut back hours.

In December, hiring around the U.S. fell for the first time in seven months, as the virus weighed especially hard on restaurants, bars and other service-related businesses. The number of Americans applying for weekly jobless claims, a proxy for layoffs, last week also jumped to nearly 1 million.

The financial need is greatest among lower-income households. Yet almost half of households with incomes above $150,000 said they needed the stimulus checks for financial stability, according to a recent survey from Credit Karma. Almost 6 in 10 households are facing financial hardship, TransUnion found in a November survey.

The additional stimulus funds "will be essential to the financial stability of many Americans, including those who appear to be higher earners," Colleen McCreary, chief people officer at Credit Karma told CBS MoneyWatch in an email. "As the pandemic drags on, Americans are continuing to feel the financial crunch."

A new survey from Bankrate.com found that more than half of Americans said the second stimulus check of $600 per person won't last them longer than a month. Most said they would use the money to pay household bills and day-to-day essentials.

Overall, Mr. Biden's stimulus plan would amount to roughly $3,500 per household, according to Oxford Economics. In other measures to support workers and help prop up the economy, he also wants to increase enhanced unemployment benefits to $400 a week and has called for raising the federal minimum wage to $15 an hour.

The pay floor, now $7.25 an hour, hasn't been lifted since 2009, although many states and cities around the U.S. have boosted the local minimum wage.

—With reporting from the Associated Press.

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