Stimulus Update: Treasury Issues 6-Month Progress Report Largely Showing Positive Economic Impact
It has been six months since the implementation of the historic American Rescue Plan stimulus relief bill that gave relief to millions of people impacted by the coronavirus outbreak. The Treasury Department recently released its progress report highlighting how the bill met the needs of an economy and country in the middle of a pandemic.
By the fourth quarter of 2020, U.S. GDP has fallen over 2% for the year, the unemployment rate averaged 6.7% and employment growth averaged only 213,000 jobs per month. This employment growth slowed through December of 2020 as the world sheltered in their homes and the virus reached every corner of the United States.
The Treasury Department states that since the bill’s creation, over 3 million jobs have been added back to the economy and job creation has averaged more than 765,000 over the last three months. This was facilitated by a widespread vaccination effort, with 179 million Americans now fully vaccinated.
Of the $1 trillion allocated to the bill, over $700 billion has already been distributed back to American families. This includes stimulus payments, child tax credit checks, assisting businesses impacted by the unprecedented downturn and delivering funds to state and local governments.
The department’s distributions worked, with real GDP growth in the first half of the year strong enough to push economic output above its pre-pandemic peaks Real GDP growth rose to 6.3% in the first quarter of 2021 and 6.6% in the second quarter. Personal consumption growth, the largest contributor to GDP, rose an impressive 11.4% to 11.9% in the same period.
The report was largely an ode to the positive impacts of the stimulus bill, but also made clear an area of the economy that is still in need of abundant reform — childcare.
A second tranche of over $100 billion in state and local fiscal recovery funds will be delivered next year. This money is largely intended to fund and create “more equitable economic recovery.” Part of this equity is increasing access to childcare so that parents, and particularly women, can get back into the workforce.
This was recently highlighted on Vice President Kamala Harris’ first trip to the Treasury Department since she took office. With the department’s report in hand, Harris urged Congress to fund the largest-ever federal investment in affordable child care. Harris also added that some estimates suggest GDP would be five points higher if women participated in the workforce at the same rate as men.
Treasury Chair Janet Yellen also added, “It’s past time that we treat child care as what it is — an element whose contribution to economic growth is as essential as infrastructure or energy.”
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