Today, the U.S. Department of Health and Human Services (HHS) released a new report that highlights the economic impact of the American Rescue Plan (ARP), specifically the role ARP played in reducing poverty. The report, which was produced by researchers in HHS's Office of the Assistant Secretary for Planning and Evaluation (ASPE), projects that economic relief efforts—including economic impact payments, unemployment compensation and expanded unemployment compensation (includes federal supplemental benefits), and the monthly Advance Child Tax Credit payments—kept 20.1 million people out of poverty, including 7.8 million children.
“Today’s report highlights how President Biden’s American Rescue Plan is powering our economy and reducing poverty in our country,” said HHS Secretary Xavier Becerra. “The Biden-Harris Administration is committed to lifting people out of poverty and ensuring that we build a better economy for everyone.”
“This research supports the growing body of evidence that cash assistance is a powerful mechanism for keeping families and children out of poverty,” said Acting Assistant Secretary for Planning and Evaluation Dr. Rebecca Haffajee. “Assistance such as tax credits and unemployment compensation can have an even bigger impact on people with historically higher poverty rates, including many Black and Brown families.”
The study used an innovative economic technique called “nowcasting” to project how many people were in poverty in 2021. Official statistics on poverty for 2021 will not be available until September of this year, so this analysis helps us understand—closer to real time—the reduction in poverty related to last year’s economic relief efforts. The projections are comparable to other recent studies which bolsters confidence that economic relief efforts had a substantial effect on poverty.
Key findings from the report include:
- Federal and state economic stimulus reduced overall poverty by 45 percent in 2021 (20.1 million people).
- Federal and state economic stimulus reduced child poverty by 56 percent (7.8 million children).
- This includes 1.1 million children who were kept out of poverty by the Consolidated Appropriations Act in Dec 2020, 3.0 million children who were kept out of poverty by economic impact payments included in the American Rescue Plan in March 2021, 1.8 million children who were kept out of poverty as a result of unemployment compensation and expanded unemployment compensation (includes federal supplemental benefits), 1.8 million children who were kept out of poverty by the Advance Child Tax Credit, and 95,000 children who were kept out of poverty by state stimulus and back-to-work bonuses.
- Poverty reductions were larger for groups with historically higher poverty rates— American Indians/Alaska Native (7.6 percentage points), Black non-Hispanic people (7.0 percentage points), and Hispanic people (6.9 percentage points).
Read the new ASPE report.