A woman wears a face mask while she is at Madison’s Niche boutique in Huntington, New York, on Jan.
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Child tax credits are an “underrated incentive” that could boost sales in the retail, restaurant and travel industries – especially as shoppers emerge from the pandemic and prepare for the back-to-school season, according to one Tuesday from Cowen. published research note analysts.
Families have received child discounts for years, however the American rescue plan made several important changes. It increased the amount per child from USD 2,000 to USD 3,000 for anyone aged 6-17 and up to $ 3,600 for each child under 6 years of age. It qualifies low-income families with little or no taxable income. And it has changed the payout modalities so that families get half of the money through direct deposits, which run from July to December. Families receive the other half after the taxes have been paid.
That means $ 250 or $ 300 per child per month. Families earning up to $ 150,000 for a couple or $ 112,500 for a single parent family are known as heads of household; or $ 75,000 as a single taxpayer receives the full amount. Above this amount, payments will gradually be discontinued – but those who receive less money will also receive advance payments.
Parents and caregivers of nearly 90% of children in the United States receive payments, according to the Internal Revenue Service.
Here are four key insights from the analysts:
The child tax credit will be estimated at $ 150 billion next year, according to Cowen. Analysts at the equity research firm say the additional dollar may surprise both Americans and the economy at large, calling it “an underrated catalyst for discretionary consumer spending.”
When families get the money, Cowen predicts, they will spend it on groceries for the home, restaurants, and online shopping. The analysts named retailers and restaurants best positioned to attract those dollars. On the food side, they pointed to Walmart, aim and grocery store. Among the fast food chains they called Jack in the Box, Wing stop, Papa Johns and Darden, based on a survey of consumers about their income and whereabouts. And among the e-commerce companies named them Amazon.
Many families have already increased spending on new shoes and clothes when they come out of their home after the Covid-19 vaccination. Cowen analysts said child tax credits are likely to flow into this spending spree.
Some retail industry observers already have predicted a normally hot back to school season Families long for a fresh start and a sense of more normalcy – and may draw this to fresh notebooks and outfits for the first day of school.
Cowen analysts expect retailers offering back to school or team sports to be well positioned to attract child tax credits, including Walmart, Kohls, Foot locker, Dick’s sporting goods and Nike. You also said retailers who focus on value, such as: Burlington, Horse and T. J. Maxx, could get a boost as they target low-income families who receive child tax deductions. You also said American Eagle Outfitter is in a good place to start attracting payments as it caters to styles that teenagers crave, such as: as loose-fitting denim and casual wear.
Parents, grandparents, and other caregivers can spend part of the child tax credit on themselves in the form of beer, cigarettes, and plane tickets, according to Cowen.
Analysts estimated the tobacco industry could raise about $ 1.2 billion and alcoholic beverages about $ 2.7 billion of the estimated $ 150 billion impact of the child tax credit. That could mean good news for the tobacco company Turning point marks and players in the beer industry, Constellation marks and Boston beer.
Cowen estimates that child tax credits will increase air travel by approximately $ 1.15 billion as payments arrive in July for the vacation season. This will be most noticeable with airlines geared towards vacation travel and lower prices, such as Faithful, border and ghostthe analysts predicted.
Monthly payments will end in December – but Cowen analysts are betting that they will be extended. In the note, they said they expect the one-year program to be extended through a law of reconciliation through 2025.
In the note, the analysts named the scope and scope of the government program to combat child poverty. They called it a “major political shift” functioning as a “universal basic income for low-middle-income parents”.