KANSAS CITY, Mo. — Third stimulus payments are showing up in bank accounts for many people around the Kansas City area this week.
Experts predict the U.S. economy will grow by about 6% this year, thanks to the $1.9 trillion stimulus package and rapidly increasing COVID-19 vaccination rates. Economists expect a big bump in retail sales this month, too, which is what happened in January when the last stimulus checks arrived.
But this third round of payments are different from other stimulus checks Americans have received in the last year.
The difference is, this time, the payments are more bailout than stimulus because not everyone is getting a check.
Individuals earning up to $75,000 will get the full $1,400, as will married couples with incomes up to $150,000. The size of the check would shrink for those making slightly more, with a hard cut-off at $80,000 for individuals and $160,000 for married couples.
Experts say the payments target lower-income workers hurt by the recession because they’re more likely to spend the money quickly on necessities like keeping a roof over their heads and food in their bellies.
“My guess is the majority of people who are getting that money probably have fairly urgent needs,” said Chris Kuehl, an economist and managing director of Armada Corporate Intelligence. “They are going to want to catch up on things like mortgages, rent, whatever medicines they need and food. That sort of thing.
“At that point they will start thinking about what else can I do with that money? I don’t think you will get a whole lot of discretionary spending. You got more of that with the previous rounds, but this time around will be a little bit more need driven.”
Kuehl said don’t expect to see a lot of big ticket purchases.
He said the average consumer spends about $2,000 every couple of weeks just to meet their daily needs, so $1,400 may not go very far.
Economists expect people in the Midwest to be more likely to try to save some money.
While the aid is expected to help many in financial distress, the government faces a difficult task of paying for it, with tax increases and spending cuts likely to dominate political discussion at the end of the year.