Financial markets have certainly performed far better than expected over the past 12 months, taking flight on the wings of policy support and vaccination prospects. At times, it has been hard to reconcile the optimism of investors with the troubling news on economic activity. That kind of “K-shaped” recovery pattern has been seen at many levels, and will be with us for some time.

At the moment, things are looking up. While not fully contained, Covid-19 is being brought closer to heel in many countries, which should allow additional mobility and economic activity. There is substantial pent-up demand and saving around the world, which should create a second “V-shaped” leg for the recovery. Forecasts are currently being revised upward at almost the same rate they were being downgraded 12 months ago.

Beyond the next four quarters, the pandemic will almost certainly have lasting impacts, which will need to be managed carefully. Individuals and industries may struggle with after-effects for a long while after the pandemic dissipates.

Following all of this from the confines of my house has been a bit surreal. Like many, I have been working harder in the last year, analyzing the dramatic changes to the world caused by an organism only .07 microns in size. 

The Outlook Is Improving, But Full Recovery Is Still A Long Way Off
I still see articles suggesting craft and home improvement projects to keep office refugees from getting bored, but most of the people I correspond with do not have a surfeit of extra time. I feel like I am living where I work, not working from home.

Nonetheless, I feel incredibly fortunate. Our family has maintained good health, and I have a job that can be done from home. Our son’s wedding had to be postponed and two graduations will be held virtually this spring, but these are small inconveniences compared to what others have endured. My heart and my thoughts go out to families that have been touched by Covid-19, and my admiration goes out to the caregivers who have tended to the sick.

My wife and I received our first vaccinations last week. We felt different when we returned home; not because our shoulders were sore, but because an end to our isolation was in sight. There is a lot of quality time with family and friends to catch up on; a lot of hugs and handshakes deferred, and celebrations put on hold. One day soon, we hope, the hash marks will stop.

Little Kids Get Big Benefit
The American Rescue Plan Act of 2021 was ratified last week. Much attention has been focused on the $1,400 economic impact payments and the extension of $300 supplementary unemployment benefits called for in the bill. But the Act went further than simple Covid relief, reshaping taxes in a way that will change children’s lives. 

Poverty in the U.S. is defined as lacking a minimum income to afford food and necessities. That minimum is indexed to inflation and adjusted for household size. The poverty line for a single American parent with one child in 2020 is $17,839; for a household of two adults and two children, $26,246. As of 2019, 10.5% of the U.S. population lived in poverty, including more than 10 million children under age 18. 

Parents may recognize the child tax credit. Through 2020, it was a helpful annual income tax credit of $2,000 per child. Households that did not earn enough to have accrued $2,000 in income tax liability could receive a partial $1,400 refund.

Starting in 2021, the child tax credit will increase to $3,000 per child, or $3,600 for children under age six. Instead of realizing the credit upon the filing of a tax return, starting in July, families will receive this tax credit as a monthly distribution of $250 or $300 directly to their bank accounts. Every parent with an income of under $75,000 (or couples filing jointly earning up to $150,000) will automatically receive payments. And crucially, even parents with low or no income will receive the full value. Higher earners (households under $400,000) will still qualify for the previous $2,000 annual credit.