Among the key points, the bill includes $1,400 checks for adults earning less than $75,000, phasing out completely at $80,000. An additional $1,400 is included for each dependent child. The child tax credit is also expanded to $3,000 from $2,000 for children age 6-17, and $3,600 for children 5 and under.
The bill includes $350 billion for states and local governments and $130 billion for K-12 schools. Other items include $14 billion for airlines and airports to extend payroll support, $25 billion for restaurants, and $45 billion in rental assistance for low-income households. Also included is $160 billion for vaccines and testing.
The bill does not include a minimum wage hike that President Biden pushed for. As expected, Democrats and Republicans are split on the bill, with not a single Republican voting for approval.
While the effects are yet to be determined, the Organization for Economic Cooperation and Developments expects the stimulus package to grow global GDP by 5.6% and help the world economy return to pre-pandemic levels by mid-year. Again, this is yet to be determined.
The stock market reaction is expected to be positive, as there are hopes the additional funds will further accelerate our recovery and stimulate the economy. Concerns from the other side of the table are that such large influxes of cash may have detrimental effects down the road, such as inflation and the devaluation of the dollar, as well as increasing concerns about the continual growth of the nation’s debt.
The bill is very broad, but some areas of the economy look poised to benefit more than others. If you have questions about how this stimulus package may affect you and your portfolio, feel free to give us a call. We’re always here to help.