President Biden’s stimulus bill is set to become law this week after the Senate passed the amended bill on Saturday with only marginal changes.

The House is set to take it up Tuesday without amendments, where it is expected to pass. The bill is expected to provide about $1.2 trillion (5.5% of GDP) of fiscal spending in fiscal year 2021 and $500 billion (2.3% of GDP) in fiscal year 2022, with additional spending in out years. While there’s always a chance some things could change before final passage, the following summarizes the major provisions of the $1.9 trillion legislation.

Stimulus Checks

The package includes a third round of economic impact payments of $1,400 for individuals making less than $75,000 and married couples with combined income below $150,000. Payments will phase out at $80,000 for individuals and $160,000 for married couples. Children and adult dependents are eligible for the full $1,400. Adult dependents, including disabled adults and college students, weren’t eligible for the first two rounds of checks. This is the largest portion of the bill with payments totaling about $411 billion.

State & Local and Schools

There is $350 billion in state and local aid that can only be used to cover pandemic expenses, pandemic revenue shortfalls, and to pay for investments in water, sewage, and broadband. The funds cannot be used for tax cuts or shoring up pensions. There is around $130 billion for K-12 schools to pay for reducing class sizes to accommodate social distancing, improving ventilation, and providing more personal protective equipment.

Unemployment Benefits

Enhanced unemployment benefits totaling $300 a week, which were set to expire on March 14, will be extended through September 6. In addition, the first $10,200 of the benefits for 2020 won’t be taxable for those making under $150,000.


There is an estimated $90 billion allocated over several years to facilitate the vaccine rollout including distributing, administering, and tracking vaccinations. Vaccine development would also get a boost, with around $20 billion going for research for vaccine and therapeutic manufacturing and procurement. $3 billion would go for a strategic national stockpile of vaccines while $25 billion would go for testing, contact tracing, and reimbursing hospitals for lost revenue related to the pandemic.

Business Relief

There is an estimated $73 billion in business relief and an additional $11 billion in airlines payroll support. About $29 billion is earmarked for the restaurant industry targeted at small and midsize restaurants and chains. The restaurant aid will come as grants that don’t need repaid if used for operating expenses, including payroll, rent, and providing personal protective equipment to employees.

The bill also includes an expansion of the child tax credit and rental payment assistance.

Implications for Economy and Markets

This stimulus package comes on the heels of late December’s $900 billion stimulus that included $600-per-person checks. Estimates show excess consumer savings of about $2 trillion that is now set to increase closer to $3 trillion with a historically high savings rate. Consumer net worth is also at a record high due to housing and stock market gains. We expect the excess savings, coupled with significant pent-up demand, to fuel strong consumption as the pandemic fades this year.

The vaccine rollout is accelerating, cases are dropping, and states are now reopening. We were already seeing the economy accelerate as evidenced by Friday’s jobs report that showed a 379,000 job increase in February despite temporary negative effects, primarily weather-related. This package will further bolster the recovery and supports our favorable outlook for stocks and improving profits. Cyclical sectors stand to benefit the most from the reopening and an accelerating economy. Financials, Industrials, Materials and Energy are all well positioned. The hard-hit travel and leisure industry will also benefit from significant pent-up demand.

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