The record inflation has forced states to take immediate measures to help out residents in the face of a total lack of federal support. 21 states have already declared some form of an inflation relief stimulus check and many have already reached the long-suffering residents. And that includes Republican states like Florida under Governor Ron DeSantis, a vicious opponent of the stimulus check.
The situation has morphed into a dangerous situation triggered by a volatile combination of rising interest rates, high inflation, supply chain woes, and the war in Europe.
And even as the Federal Reserve struggles to contain inflation that has reached the highest rate since November 1981, its moves could further push the country to a recession.
Many policymakers and financial and economic experts are now wondering whether the Federal Reserve’s existing steps are going to cool down the situation or whether further changes in fiscal policy are needed to offset the economic repercussions.
It is interesting to note that even economists and policymakers are totally in the dark about the steps they need to take to settle the economic situation. They have never faced such a situation before. Everything right after the pandemic has been a learning experience from the unprecedented situation.
But what is clear is that households across the country are struggling and are desperately in need of more support immediately. Experts believe that further relief measures like the stimulus checks will be massively helpful. But in the absence of a comprehensive federal initiative like the three previous rounds of stimulus checks, or economic payments, it is state support that is the only hope for low and moderate-earning Americans at present. But the government needs to get it right and reach out to the people who genuinely need the money.
One of the things that went against the third stimulus check was that it reached a substantial section of the population whose earnings were not disrupted by the pandemic. People who continued to earn at pre-pandemic levels also benefited from the stimulus infusion.
This created a situation of excess money in the hands of a section of the population. It led to an increase in spending on non-essential goods on a massive scale and created a demand and supply mismatch. It was one of the major reasons for the present inflation.
Experts believe that further relief measures are needed right now as citizens are facing negative income growth when compared to pre-pandemic levels. There has been a generous increase in all-around wages after the pandemic, especially in the last two quarters of 2021.
But the record inflation rate, which touched 9.1% in June, has thrown most predictions off track and the administration is having to come up with new measures outside of increasing lending rates to contain it.
Is The Us Economy Sliding Into A Recession
There are increasing signals that the US economy is slowing, but the question remains whether it has decelerated into recession. There was a shrinking of the gross domestic product for the second consecutive quarter in a row. But it has become difficult to give a definite term to the present situation. Because the situation right now is not akin to a full-blown recession.
But that does not mean that a full-blown downturn is out of the question. There are elevated chances of a recession over the next two years at least. The Federal Reserve is expected to slow the pace of the hike in rates to 50 basis points in September and 25 basis points in the last two months of this year. the rate hike is expected to eventually top out at between 3.25% and 3.5%.
But experts strongly believe that even if the US economy slips into a downturn in 2023, there is at least the hope that the contraction is not expected to be deep.
State Stimulus Check Remain Only Hope Of Immediate Succor
With Governors of states stepping in to help their residents, people have already received support while others will receive stimulus checks and tax rebates by the end of this year.
Alaska is among the more generous states and residents can expect a $3,200 per person payout in their banks starting the third week of September 2022. Paper checks are expected in early October.
The initial $5,500 payout that was approved by the state Senate was rejected by the state House, eventually leading to the $3,200 payout. The increase in payments was necessary as rising energy prices, inflation, and other issues have strained the budget of Alaskans.
California has set aside $9.5 billion from its $308 billion state budget. Around 23 million, close to 60% of the residents, will receive stimulus checks that could go up to $1,050 for a family of three or more filing jointly and jointly earning up to $150,000.
Filers with income even as high as $500,000 filing jointly are eligible for a stimulus check but the amount will be pared down to $600 for a family of three. Residents can expect the amount to reach them by the last quarter of this year.
Residents of Colorado above 18 years and who have resided in the state throughout 2021 will get a $750 tax rebate as individuals and double that as joint filers by the end of September. This was revealed by the Dept. of Revenue, Colorado.
Around 350,000 residents in Connecticut can expect a one-off tax rebate of $250 for every child and stimulus checks are already on the way.
Residents in Delaware will get a relief payment of $300 that will be issued this summer. The payments are being given to bring relief from high fuel and grocery prices. Residents who have filed their 2021 returns will get the payments.
State officials in Florida will send a $450 stimulus check to around 59,000 families with foster children, and also to related and non-related caregivers.
Residents of Idaho will get a tax rebate of 12% of their 2020 returns with a minimum assured amount of $75.
Maine was among the earliest states to legislate on sending out state stimulus checks. Single filers earning up to $100,000 will get $850 stimulus checks while married couples filing jointly and earning up to $150,000 will get double that amount.