The US avoided a recession or maybe a depression because of stimulus checks in 2020 and 2021.
Inflation has increased as a result of the influx of cash into both people and businesses. Politicians currently face a challenge, according to Yahoo. They must decide if increasing direct aid will make inflation worse or help the US keep it under control.
Millions of Americans benefited directly from the assistance. If more relief money is used for discretionary purchases, costs might increase. However, as the economy changed, so made their spending habits.
Less than one in five Americans were forced to spend their money on essentials when the American Rescue Plan was implemented in the spring of 2021.
Targeted Stimulus Checks Will Help The Economy
One-third of individuals who received stimulus checks were able to save the money, while the remaining one-half used it to reduce debt. The stimulus payments saved millions of American households from financial ruin, but they also had a significant unintended consequence. The economic impact was felt right away when the third and last set of inspections arrived in March.
Although all of that spending gave the economy a much-needed lift, it was not without a cost. The third round of checks marked the beginning of the economy’s escalating inflation, which would endure through the spring, summer, and the current holiday season. Greater demand equals increased expenses.
The scope of government stimulus check programs is so constrained that they are no longer likely to increase inflation. Unlike the federal government, which spent trillions of dollars over several stimulus rounds to provide the majority of Americans with $3,200 or more, state stimulus amounts are usually $500 or less, with many focusing primarily on low-income taxpayers. These modest, targeted payments might assist Americans in managing inflation without driving it up.