Federal support from expanded unemployment compensation and economic impact payments kept the poverty rate low. Counting these benefits in addition to other cash income, we estimate poverty in 2021 was 2.1 percentage points lower than before the pandemic (8.4 percent compared with 10.5 percent).1 We project the combined impact of unemployment compensation, federal and state stimulus payments, the Advance Child Tax Credit (CTC), and back-to work bonuses reduced poverty in 2021 by 45 percent. We project economic impact payments under the American Rescue Plan kept 7.9 million people out of poverty in 2021. In addition, the Advance CTC which began in July, kept 2.9 million people out of poverty, including 1.8 million children, a reduction in child poverty of 23 percent. This aligns with other research finding around a 40 percent reduction with a full year of Advance CTC. The projected poverty rate for children in 2021 after the Advance CTC and federal and state stimulus initiatives is 8.3 percent, 42 percent lower than the official poverty rate for 2019. We project child poverty in 2021 was cut by 56 percent compared to what the rate would have been without federal and state initiatives. The 2021 poverty reduction was larger among non-Hispanic Black, Hispanic, and American Indian/Alaska Native people, relative to all people. Compared with before the pandemic and exclusive of the Advance Child Tax Credit, the annual poverty rate fell by 6.2 percentage points among American Indian/Alaska Native people, 5.3 percentage points among Black non-Hispanic people, and 5.0 percentage points among Hispanic people. We project a rise in poverty during July to December 2021 when economic impact payments had been spent and unemployment benefits were scaled back--whether or not the Advance CTC is included as income.
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