The economic situation improves in 2021, but will it continue?
Even though jobs are plentiful and wages have increased, many families still face a shaky economic outlook. higher than average inflation, which Hit low and middle income family hardest, likely to remain in 2022. a rental crisis looms can either undo benefits in financial wellness Found by the Federal Reserve in late 2021.
In addition, many new or expanded government benefits created during the pandemic have now ended, adding to the financial uncertainty of many households. Reviving the Extended Child Tax Credit (CTC) would be one way to help families with children weather this uncertainty.
During the Pandemic, Most Americans Got Three Rounds Economic Impact Payment (EIP) Which started in April 2020 and ended in March 2021. From July to December 2021, vast majority Families with children also received monthly payments of up to half of their expected Child Tax Credit (CTC), thanks to the American Rescue Plan (ARP) Congress passed last year. Many of those households could otherwise have waited until they filed their tax returns in the spring of 2022 before receiving their CTC payments as refunds.
In addition, for 2021, the ARP also increased the child loan amount to approximately $150,000 for single parents and married couples with incomes less than $190,000. he saw his credit extended Up to a maximum of $2,000 for children under the age of 17, up to $3,000 for children ages 6 to 17, and up to $3,600 for children under the age of 6. Because the law made CTC fully refundable, the biggest beneficiaries of these changes were the lowest-income households.
These payments probably put families in a better financial position at the end of 2021 than in previous years. EIP and CTC payments helped many families pay off debt and save, At the end of 2021, 68 percent of adults reported that they could cover an emergency expense of $400 exclusively using cash or its equivalent, according to the Federal Reserve’s Survey of Household Economics and Decision Making (SHED). This was up 7 percentage points from 2018 and up 18 percentage points since the Fed started collecting these data in 2013.
SHED also showed that 78 percent of adults were doing fine financially or living comfortably in 2021, well above previously reported rates. Low-income parents saw the greatest gains in financial well-being.
It is not clear what is the condition of those families today. While there are millions of low- and middle-income workers Back to WorkMany, often at higher wages than before the pandemic, remain out of the labor force. As the Federal Reserve raises interest rates to slow inflation, the jobs market could cool. And the EIP and Extended Child Credit have ended.
Most households probably received the second part of their CTC as well as other tax credits when they filed their tax returns earlier this year. And because those government payments made it possible for some people to keep up with their bills in 2021, they may have saved some of the refunds they received in 2022. But higher prices have probably eaten away at much of that savings, especially for low-income families.
Data from December 2020 to December 2021 showed families with children who received monthly CTC payments Big drop in food insecurity food insecurity rates compared to those who did not, but rose after payment finished,
Extending the CTC now can help families get back on the path to financial security by the end of 2021. Otherwise, families risk losing out on those benefits, leaving them struggling to cope with an increasingly uncertain financial future.