Millions of Americans woke up to bigger bank account balances today, thanks to the first monthly payout of cash for parents and caretakers.
- Economists say the installments — paid through December — will ease the burden on millions of families and fuel the spending boom already underway.
The big picture: The child tax credit is forecast to contribute to the single biggest drop in child poverty in history.
Before: As much as $2,000 was paid out in an annual, lump-sum refund for kids younger than 16.
After: That now bumps up to as much as $3,000 for children ages 6–17, or $3,600 for those under 6. Half of the payments will come upfront in monthly cash payouts.
- And the poorest families — that don’t owe income taxes — are eligible for the full amount.
What they’re saying: “People have written to me to say they used the money to buy their kids new shoes and send them to summer camp or for after-school care,” President Biden told reporters today.
- Bank of America says the tax credit alone will add over 1% to monthly disposable income, supplementing what some families lost after a number of states cut off topped up unemployment benefits.
What to watch: “[W]e expect consumer demand to continue to outpace supply, at least through the end of the year,” thanks in part to the child tax credit, JPMorgan Funds’ David Kelly wrote.
What’s next: Goldman Sachs expects the payouts to stick around beyond 2021.
- Lawmakers are debating whether to extend the benefit — or make it permanent.
Axios’ Oriana Gonzalez contributed reporting.