4 Reasons Americans Might Get a Second Stimulus Check After All

Will there be a second stimulus check? It's the question on everyone's mind as lawmakers have been debating the issue since May. Under the CARES Act, Americans were eligible for up to $1,200 per adult plus up to $500 per dependent in stimulus cash. The bulk of that money has already been disbursed, and it's fair to say that much of it has already been spent.

In May, Democratic lawmakers introduced the HEROES Act, which calls for a comparable stimulus to the one that went out under the CARES Act. (In fact, it's a bit more generous because it calls for $1,200 for dependents, as well -- up to three per household.) But the HEROES Act has been stalled in the Senate, and Republican lawmakers have made it clear that they have no intension of voting it in.

In fact, at one point, it seemed like Americans' chances of getting a second stimulus were pretty low. But here's why an additional round of payments could, indeed, come through.

1. The COVID-19 crisis is worsening

In May, the COVID-19 outbreak was largely contained to the Northeast, and cases seemed to be going down, thanks to the lockdown measures that were implemented nationwide. But now, COVID-19 cases are skyrocketing, and during the course of July, the outbreak has worsened rather than gotten better. And while it's too soon to know if we'll be looking at a second extreme lockdown that mimics the first, we can't write off that possibility -- and that alone could push lawmakers to agree to a second stimulus check.

2. States are already imposing further restrictions

Many states have paused their reopening plans in light of the uptick in COVID-19 cases, and some are already starting to impose additional restrictions. Louisiana is shutting down bars. In California, many counties have been forced to close indoor restaurants, movie theaters, and museums. And New Mexico is putting a ban on indoor dining, as well.

All of this means one thing: Our economic recovery is unlikely to be smooth or quick, and as restrictions increase, more jobs are likely to be lost. And a higher jobless rate means added relief is certainly needed.

3. The unemployment rate is still very high

Lawmakers have used May and June's lower jobless rates to fuel the argument that a second stimulus is unnecessary. But that's a weak argument in the face of double-digit unemployment.

Before the pandemic, the unemployment rate was 3.5%. Based on June's jobs report, it's 11.1%. That's an unsettlingly high number even during a recession. Given the potential for added job loss due to a surge in COVID-19 cases, it's easy to make the argument that a second stimulus check is a must.

4. The confluence of flu and COVID-19 could result in additional shutdowns

Though some health experts had initially hoped that warmer weather would slow the spread of COVID-19, that clearly hasn't happened. But dire as the situation may be now, let's think about what things might look like starting in October, when flu season traditionally kicks off.

At that point, the double threat could be enough to prompt schools to close and additional businesses to shut down out of an abundance of caution. Once that happens, parents lose child care, which compromises their income, and workers risk layoffs. A second stimulus check could go a long way in mitigating financial stress in light of these scenarios.

When the Senate reconvenes in the coming week, the topic of a second stimulus check will no doubt be on the agenda. It's too soon to say with certainty that Americans will be in line for a follow-up stimulus, but based on the factors above, there's a good chance some additional relief will be on the way.

10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

Stock Advisor returns as of 2/1/20

The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.