Round one of child tax credit payments slashed hunger rates, U.S. data shows

The monthly payments of up to $300 for each kid under five and up to $250 for each kid under 18 are the result of one of the most sweeping provisions in the American Rescue Plan, though the policy did not garner much media attention at the time. The payments are set to continue each month through December.

Before the first tranche of tax credit payments hit bank accounts in mid-July, about 11 percent of households with children reported that they sometimes or often did not have enough to eat in the past week. After the money went out, the rate dropped to just over 8 percent — a decrease of nearly 24 percent — and the lowest rate recorded since the beginning of the pandemic.

Researchers say it is too early to fully understand the latest drop in hunger rates, but it appears to be closely tied to the child tax credit payments. Households with children saw a major decline, while adults in households with no children saw virtually no change over the same period, with about 6 percent reporting a lack of food sometimes or often.

Other factors that are very likely contributing to the decline: An improving economy and also special pandemic food aid payments that kids have received in recent months to help make up for meals missed at school last year.

The government has near real-time data on how households are faring during the pandemic through a tool known as the Household Pulse Survey, which launched in April 2020 to help policymakers understand what was happening in the economy throughout the crisis.

The survey has routinely shown that hunger and other forms of hardship decrease after Washington doles out stimulus checks, bumped-up unemployment payments, increased Supplemental Nutrition Assistance Program benefits or other forms of aid.

Hunger rates, for example, peaked in December, several months after Washington gridlock stalled any further pandemic aid. At that point, more than 18 percent of households with children reported that they sometimes or often did not have enough to eat in the past week. After Congress passed two aid packages, in December and March, which provided two additional rounds of stimulus checks and a 15 percent increase in SNAP benefits, overall hunger rates plummeted 40 percent.

The U.S. Census Bureau survey has also routinely shown that households in need will often spend direct cash assistance on necessities like food and utilities.

The most recent survey data shows that nearly half — 47 percent — of households reported spending their tax credit payment on food. About 17 percent of households with one kid under five reported spending the money on childcare.

The survey found the child tax credit payments appeared to make it easier for households to cover all of their expenses. There was a decline in the share of adults in households with kids reporting that it was somewhat difficult or extremely difficult to cover their expenses, from 32 percent to 29 percent, a nearly 8 percent decrease. By comparison, the share of adults in households without kids reporting difficulty went up slightly over the same period.

There are still glaring racial inequities in the overall rates of hunger, and in the rates of recovery. Black households with children report more than twice the rate of food hardship compared with white households.

The latest survey results also suggest the food insecurity rate may be creeping back up for Black households with children while rates for Hispanic households, white households and Asian households with children have all recently declined, according to an analysis of the new data by Schanzenbach at Northwestern.