Many of us have received our first round of stimulus checks – approximately $1,200 per person (with an additional $500 per child)! However, was it really enough for all of us to weather this recent economic storm? Likely not, which is why it’s leading to additional conversations on Capital Hill. Naturally, this leads to the inquiry, “Is there another stimulus coming?”
What Would the Stimulus Look Like? Another Check?
Based on the articles I have read (Business Insider, Forbes, CNBC), there are quite a few different options for how we might receive a second stimulus. Instead of a one-time $1,200 check, those that qualify might receive:
- A basic living payment of $2,000 a month for 6 months, or “until the economy returns back to normal”
- A nice new shiny government job! (ie. a focus on infrastructure, which means employment for people that were let go recently)
- Payroll tax cuts so we can bring more money home, spend more, and drive the economy back into full force
- A huge reduction in mortgage or rent payments – actually, it’d be free for a year! The government would pick up your mortgage tab. No ding to your credit, no interest owed.
- Student loan forgiveness
And, there a handful of other stimulus options that we’re hearing about, but they are less likely than the potential options above.
What’s the Likelihood of Another Stimulus Payment?
While all of the above options sound nice, what is the actual likelihood of another stimulus payment?
The Twitter Poll
Like any good blogger that doesn’t care one iota about the rules of an unbiased field and large sample sizes, I took this poll question to my Twitter fan club!
Do you think we’ll get another stimulus check?
— Derek (@LAMFinances) April 29, 2020
At the time of posting, this poll received 22 votes…
- 68% said, “Not a chance, bro.”
- The other 32% said, “Absolutely! My pocket’s open, it’s ready!!”
The Opinion of the Talking Heads (to be taken with a grain of salt)
Every report I’ve listened to or read has come with skepticism on the second round of stimulus payments, and for good reason (by the way, the talking heads…those are news reporters. I don’t enjoy them much, but once in a while they have something decent to say.)
The $2,000/month Proposal…
The one time $1,200 stimulus checks cost the government $290 billion. Assuming the same rules apply (and in reality, the current proposal is more lenient) this $2,000 a month for 6+ months could cost the government $2-3 trillion.
That’s a pretty hefty sum…even for the U.S. government. I can’t imagine all parties being on board with that.
The Payroll Tax Cuts…
The aid really needs to go to those that lost their jobs. This would effectively only help those that still had employment. Sure, it stimulates the economy a bit, but it’s not really helping those that need it. Therefore, this one’s not likely.
No Mortgage/Rent For a Year…
This one’s getting a bit ridiculous. If it’s difficult for the government to figure out who earned a stimulus check based on tax returns that they possess, how likely are they to know who has a mortgage or rent payment? Sounds like a ton of future forms and terrible processes… And even if it was considered, the likelihood of a payment coming your way any time soon is slim.
There’s just too much potential red-tape here.
Student Loan Forgiveness
Some may not have heard, but there was already quite a bit of help for student debt holders in the first stimulus package.
If you have federal student loans:
- you may skip payments until September 30, 2020
- there will be no interest on your loans during this time
- there will also be no debt collection during that stretch.
Since the first package already helped students with federal student loans, it’s not likely that anything involving student loans will show up in the second round.
The Government Infrastructure Jobs
This one is highly likely. We saw it during the last recession and we’ll likely see it again during this one.
My wife and I received our stimulus check a couple of weeks ago.
Did we need it?
…But, I gladly accepted it and put it to good use in the stock market.
What Did Others Do With Their Initial Stimulus Payment?
According to Axios.com,
“…the most popular answer among survey respondents was to sock their money away, with 38% saying they put it into savings.”
And, surprise surprise, I took a Twitter poll and guess what that result was? 50% of respondents were putting their stimulus into savings.
The media is making it sound like everyone is out of work, no one has any money, and we’re all destined to rack up debt and go bankrupt. The reality though, is that many of us have had a good run these last 8-10 years and have assets, cash, and investments that we can live off of if we need to. The stimulus is just a nice-to-have option that many are stashing away if things get really bad.
There are Positive Signs for Effective Treatment
Gilead Sciences has made breakthrough progress toward a Covid-19 virus treatment (called remdesivir). If this drug proves effective and the virus is no longer an issue, then the workforce can continue to produce and drive the economy forward without worry of second wave of sickness.
And, even if it turns out that this isn’t the perfect miracle drug, there are plenty of other labs working around the clock to produce an even more effective treatment. So, if Gilead’s solution isn’t the right one, there will be other options soon, which means a better future for all of us (both medically and financially).
The Stock Market Is On the Rise
At one point, the Dow dipped down below 19,000. Today, it’s over 24,000. That’s a pretty decent bounce-back! This signals that many believe this downturn is a blip and that the economy will soon be strong again. And if that’s the belief of the common investor, that’s likely also the belief of our government leaders.
The Economy is Opening Up Again
Many of us have been on lock-down in April. We haven’t gone to work, we haven’t been to any local businesses, and most haven’t even left the house! But, that’s now all starting to change. States are beginning to ease up on the lock-down and are allowing people and businesses to start working again (as long as they can do so safely).
This means America will finally start producing again. And, with an increase in production and services, our economy will hopefully thrive again.
All These Positive Signs AND a Stimulus? I Doubt It.
There are just too many things going in the right direction currently. An additional stimulus for the masses just doesn’t make sense.
If, down the road a couple months, things start to take a dive again (ie. the pandemic returns, the stock market slumps on poor results, small businesses struggle to stay afloat…), then it may be possible. But at this moment, the trajectory of progress on all fronts makes it seem highly unlikely. And therefore, likely no additional stimulus paychecks.
No Stimulus Payment? What You Should Do Instead
So what if I’m right? What if there’s not another stimulus check coming to your door in the next few weeks and you’re struggling to get by? What should you do?
Get back to the basics and don’t overthink it:
- Cut your budget down to nothing
- No cable
- No dining out (or ordering in)
- Get rid of your car payment (and buy a beater instead)
- Find a cheaper place to rent (maybe share rent with a roomie)
- No more clothes shopping
- Etc etc…
- Fight for some income
- What can you do and who is hiring?
- Truck driving
- Delivery service
- Amazon employee
- Grocery store employee
- Remote meeting company employee
- Get a side hustle going
- Cut grass
- Pick up yards
- Detail cars
- Construction work
- Make jewelry
- Heck, maybe make some masks…
- What can you do and who is hiring?
Again, don’t overthink it. Just think about where people might spend their money and start applying or start a small business on your own (it doesn’t have to cost anything to start a small business!).
Do what you can to get through this time. It’s not wise to wait for a hand-out. It may never come!!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.