On April 21, 2021, a woman wears a face mask while shopping for a baby shower gift at Madison’s Niche boutique in Huntington, New York, during the Covid-19 epidemic. Getty Images | Alejandra Villa Loarca | Newsday According to a research note published Tuesday by Cowen analysts, child tax credit payments are a “underappreciated stimulant” that might boost sales across the retail, restaurant, and travel industries, especially as customers recover from the flu and prepare for back-to-school season. According to the letter, the monthly payments, which begin on Thursday, could help a wide range of businesses, from groceries like Walmart to fast food franchises like Jack in the Box. For years, families have received child tax credits, but the American Rescue Plan made numerous significant modifications. It raised the sum per child from $2,000 to $3,000 for those aged 6 to 17, and from $3,600 to $3,600 for those under the age of 6. Low-income households with little or no taxable income were eligible. It also modified the manner the money is distributed, such that families now receive half of the money via direct payments from July to December. After filing taxes, families will receive the remaining half. Each month, this will cost $250 or $300 per child. Families earning up to $150,000 as a couple, $112,500 as a single parent family, or $75,000 as an individual taxpayer will receive the full amount. Above that level, the payments will be phased out, although even those who receive less money will receive advance payments. According to the Internal Revenue Service, approximately 90% of parents and caregivers in the United States will get the payments. According to the analysts, there are four significant takeaways: More money equals more spending. According to Cowen, the child tax credit will provide $150 billion in stimulus over the following year. The extra money may surprise both Americans and the economy as a whole, according to analysts at the market research firm, who call it “an underrated stimulus for discretionary consumer purchase.” Families are expected to spend the money on food for the home, dining out, and internet shopping as soon as they receive it. They identified the stores and eateries that are most positioned to benefit from these funds. They mentioned Walmart, Target, and Grocery Outlet when it came to grocery stores. Based on a poll of consumers that looked at their incomes and places they generally frequent, they named Jack in the Box, Wingstop, Papa John’s, and Darden as fast-food chains. They singled out Amazon among e-commerce companies. It’s timed to coincide with ‘pent up demand.’ As they emerge from their houses after receiving Covid-19 vaccinations, many families have already increased their spending on new shoes and clothing. Child tax credits, according to Cowen analysts, will almost certainly fuel that buying frenzy. Some retail industry experts have already forecast a typically hot back-to-school season, as families want for a fresh start and a sense of normalcy, which they may channel into new notebooks and first-day-of-school attire. Walmart, Kohl’s, Foot Locker, Dick’s Sporting Goods, and Nike, according to Cowen analysts, are best positioned to grab child tax credit dollars because they cater to back-to-school or team sports. They also stated that stores that emphasize on value, such as off-price retailers such as Burlington, Ross, and T.J. Maxx, may benefit because they cater to low-income families who receive child tax credit payments. They also claimed that American Eagle Outfitters is in an excellent position to attract the payments because it specializes in teen-friendly fashions like looser-fitting denim and casualwear. Overflowing into adult categories According to Cowen, parents, grandparents, and other caregivers may spend some of the child tax credit money on themselves, such as beer, cigarettes, and plane tickets. According to analysts, the tobacco sector may earn approximately $1.2 billion and alcoholic beverages might earn about $2.7 billion of the expected $150 billion in revenue from the child tax credit. Turning Point Brands, a cigarette company, and Constellation Brands and Boston Beer, both in the beer industry, could benefit from this. It is anticipated that child tax credits will boost air travel by $1.15 billion, with payments arriving in July just in time for vacation season. According to the analysts, airlines that cater to leisure travel and lower pricing, such as Allegiant, Frontier, and Spirit, will be the most affected. It appears like there will be a renewal. The monthly payments are set to expire in December, but Cowen analysts believe they will be renewed. They indicated in the memo that they expect a reconciliation bill to extend the one-year program until 2025. The analysts stated in the report that the government program, which is aimed to combat children poverty, is massive in scale and breadth. They described it as a “major policy shift” that provides “universal basic income for low- and middle-income parents.”/n
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