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Will Child Tax Credit Payments Serve to Boost Retail Spending?

  • Starting Thursday, qualifying families will receive $250 to $300 per child each month under child tax credit payments established under the American Rescue Plan
  • Payments aim to reduce child poverty, but could also provide a boost to retail spending
  • Lower-income recipients will likely use the funds for essentials, but recipients with better financial stability are more likely to put the money toward discretionary purchases

Summary by Dirk Langeveld

Child tax credit payments set to roll out on Thursday could result in a boost in consumer traffic for retailers, economists say.

The monthly payments, established under the American Rescue Plan, will continue through the end of the year and give qualifying families payments of $250 to $300 per child. The full benefit is $3,000 per child between the ages of 6 and 17, and $3,600 per child under the age of 6.

  • The payments are available to individuals earning less than $75,000, heads of household (families with a single parent) earning less than $112,500, and jointly filing married couples earning less than $150,000
  • The key purpose of the payments is to combat child poverty, but the added funds could also act as an incentive for retail spending on goods like clothing, school supplies, food, and even vehicles
  • While lower-income recipients are likely to spend the money on essentials, recipients who are more financially secure will likely use the funds for discretionary purchases
  • Child tax credit payments follow additional personal income enhancements brought on by direct stimulus payments and supplemental unemployment benefits established in COVID-19 relief measures

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