America has gone through many changes over the past three years. People were making thousands of dollars sitting at home and racking up their unemployment money. This was also boosted by the COVID-19 relief money which was coming in. The question to ask yourself is whether or not this made people in the United States richer. Answering this question is going to take a little bit of analysis, but I’ll assure you that this is going to be a great read.
Aid Given Out
Many Americans and business owner did get a lot of money during the pandemic, but it comes with some detriments. As people in the United States were forced to stay home during the pandemic lockdowns they spent less money. This allowed for people to save a lot of what they were going to spend on products, outfits, bars, movie theaters, and going out with their buddies. Most people were additionally getting supplemental aid through unemployment due to many people being furloughed, laid off, or companies downsizing.
Unemployment Aid
This supplemental aid added more money to people’s pockets through unemployment giving them sometimes more money than they were getting from their initial jobs. This seems like it’s great because it was for those people at those times. Let’s analyze:
- $653 Billion dollars of unemployment support was provided federally to Americans.
- $439 Billion dollars by FPUC ($600+ weekly then $300+ weekly)
- $84 Billion dollars by PEUC
- $130 Billion dollars by PUA
- FPUC – Federal Pandemic Unemployment Compensation
- PEUC – Pandemic Emergency Unemployment Compensation
- PUA – Pandemic Unemployment Assistance
Child Tax Credits
Child tax credit was also changed during the time of the pandemic for Americans nationally. It was increased from $2,000 to $3,600 for children under 6 years old and $3,000 for children aged 6-17. Another change was made during COVID-19 which included children 17 years of age. Allegedly this decreased child poverty rates by 20% to 50% allowing millions of children a better life. Again, I’ll state allegedly because the changes made also included allowing half of the payments to be done monthly rather than the normal method.
- Increase of $1,600 for children under 6 years old.
- Increase of $1,000 for children aged 6-17.
- Added 17 year old to the list.
- Reduced child poverty rates.
- Allowed for monthly payments for the last half of the year.
Stimulus Funds
Now we all loved the fact that we were receiving free money from the government during COVID. Everyone was staying at home in America with some collecting unemployment with others still working. The unemployed people were raking in extra cash and receiving stimulus payments while other worked and received stimulus payments. There was over $800 billion dollars provided to people’s pockets with people having children getting a little more bang for the buck. Let’s analyze.
- Three sets of stimulus checks were provided federally with some states adding into that bucket.
- 1st Round: CARES Act ($1,200 per person plus $600 per child)
- 2nd Round: Consolidated Appropriations Act ($600 per person plus $600 per child)
- 3rd Round: American Rescue Plan Act ($1,400 per person plus $1,400 per child)
You got that right, we received a lot of money during the pandemic, but we soon learned that all of this money was not free of charge. Each one of these stimulus payments caused the United States of America to add $814 Billion dollars of debt to it’s systems.
Business Help
Now there was a bunch of businesses that closed down in the United States of America due to the Coronavirus pandemic. However, a lot of the businesses received billions of dollars worth of help which we will analyze directly. From paycheck protection, loans, and loosening limits of losses to name a few. Many airlines and restaurants received billions of dollars worth of help. So how much exactly was provided to all these businesses during COVID-19?
- Businesses received $1.7 Trillion Dollars worth of aid.
- $835 Billion dollars was from the paycheck protection program.
- $349 Billion dollars was from economic injury disaster loan program.
- $193 Billion dollars was from loosening the limits on business losses.
- $85 Billion dollars was due to the delay of employer payroll tax.
- $80 Billion dollars was provided to the airlines.
- $29 Billion dollars was given to restaurants.
Did America Get Richer?
Whether we got more money is absolutely a yes in the short-term. The problem begins after everything was said on done in America. Everybody receiving a lot of money during the COVID-19 pandemic, but in reality only the rich really collected in on their loot. Everyone else made enough to get more money, but as time rolled around we started having to pay more money for the same products. Fuel costs exploded after the pandemic, inflation rose to levels we’ve only seen decades ago, and people started spending their money as if they were still getting all the benefits.
The downfall of this has only started to really settle into Americans everywhere. Although the affect isn’t really felt as much in less economically dependent states. Referring to the fact that Californians, New Yorkers, and Floridians have much more of a high cost compared to smaller state economies. However, everyone is suffering in the current economic conditions. Although Biden stated that inflation has lowered to 3% during the summer of 2023.
This doesn’t really matter to people in the United States of America as nobody feels like inflation has lowered dramatically. The cost of consumer goods is still much higher than what everyone is used to. Sadly, it becomes a new normal of higher costs because in general people just have to deal with the consequences. Even though money was given out by the government totaling $4.6 Trillion dollars of obligations to people and businesses, overall economic conditions are considered to be down.
How Do We Know?
Reasoning of how we know the current economic conditions are on a downward trend is through the beautiful layout of statistics. Generally we’ll dive into people personal savings rate, credit card debt, and rising interest rates. Don’t worry, keeping it easy to digest is always our goal in these type of articles. Many economists are beginning to worry about the overall United States of America economy as we look at other countries which are having the same troubles as the US is. However, in the US we are stretching out a rubber band to the point where it’s going to rip.
Savings
People in America accumulated and hoarded a lot of the money they were receiving during the pandemic. Not going out or having to buy drinks at the bar really helped accumulate to savings. Additionally all the events, concerts, and conventions were canceled due to the fear of the virus spreading. Let’s see how people are doing when the economy has opened back up, interest rates have increased, and inflation has began to set in.
Before 2019 Americans generally had a savings rate of 8% to 10%, but during the pandemic this savings rate increased to a magnificent 20%-25% at certain points. Now people are generally saving less than 2019 with a rate of 3% to 5% which is basically -5% prior to COVID-19. Everyone as a whole accumulated about $2.1 trillion dollars of savings during 2020 to the end of 2021. However, this accumulated wealth has dropped by $1.6 trillion by half the year of 2022. It took us almost two years to obtain the amount and it’s taken us half a year to lose 75% of the excess.
This is a really bad trend which is basically heading us to lose all of our excess earnings during the pandemic by the end of 2023. Importantly, once we lose all of our excess that we’ve gained we’re projected to start going negative by the time 2024 begins. The majority of this loss is due to the reasons mentioned above where people still spent money like they were getting heaps of extras. On top of that mentality the cost of goods has risen at a sharp curve causing us to pay higher for the necessities we’ve always used.
Credit Card Debt
Now we’re not saying there’s going to be a huge downturn in the economy leading to a recession, but there have been recent worries with several banks going down. A perfect example being Silicone Valley Bank’s collapse leading many people to worry about the future of America. However, even though the full collapse of the American system isn’t likely people have now accumulated over $1 Trillion dollars of debt. Credit card delinquencies are at an eleven year high in recent studies which means people are having difficulty paying off what they’ve accumulated in debt.
The issue gets worse considering that the majority of Americans are living paycheck to paycheck. Around 70% of Americans are currently stressed out about their money situation and up to 58% are spending what they’re making. Half of the Americans have less or no savings compared to a year ago from March 2023 to March of 2022. For those who do have savings around 40 percent report that they have less than $1,000 in their emergency savings.
Inflation
Due to America as a whole federally dishing out up to $4.6 Trillion dollars during the COVID-19 timeline, it has caused our money to become slightly devalued. Inflation is really kicking everyone’s butts as the cost of homes, credit cards, and goods/services has increased dramatically. The new normal has been Americans barely being able to scrape by their current costs. Wages have not increased in a proportionally line with the inflation. Housing and renting double to tripled in some areas due to the pandemic plus rising interest rates.
It’s easily more difficult to own your own home in this economy due to the complexities of today’s world. Americans have to jump through hoops to simply own land let alone own their own businesses. The reality of the situation is that most businesses started decades ago and are simply passed down to new people. Inflation also has caused many of the stocks to show they are doing great, but in reality only a handful of companies are pulling the stock market upward such as Tesla, Microsoft, Apple, Amazon, Meta, and NVIDIA.
Conclusion
In the past three years, America has undergone a significant transformation marked by substantial financial support provided to individuals and businesses during the COVID-19 pandemic. While this aid initially provided much-needed relief, it raises a crucial question: did it truly make Americans wealthier in the long run? Throughout the pandemic, various forms of assistance were distributed, including unemployment aid, expanded child tax credits, and stimulus funds. Undoubtedly, these initiatives injected a substantial amount of money into the economy; however, they came at a significant cost, accumulating a staggering $814 billion in debt for the United States.
The economic impact of this financial support has been mixed. Many experienced a boost in their financial situation in the short term, with unemployment benefits, child tax credits, and stimulus payments providing a lifeline. Yet, the long-term consequences are becoming apparent. Rising fuel costs, inflation, and shifting spending habits have eroded the initial gains for many. It’s important to recognize that these economic conditions have a more pronounced effect in states with higher living costs, such as California, New York, and Florida.
As we move forward, the economic outlook for the United States is uncertain. Statistics on personal savings rates, increasing credit card debt, and rising interest rates all signal potential economic challenges. While the initial financial support offered relief, the long-term consequences of rising debt and inflation pose significant questions about whether Americans genuinely became wealthier during this period. The economic landscape is evolving, and it is imperative to monitor these factors closely as the nation navigates the complex aftermath of the pandemic.