Can The US Go For Another Stimulus Check Without Risking A Recession?

Stimulus Check
Stimulus Check

Economists at Goldman Sachs have said that consumers and businesses should be prepared to face the worst, but the Fed still has a slim chance of recovery.

Senior chairman Lloyd Blankfein warned on Sunday that there is an extremely high-risk factor of a recession and everyone should brace for difficult times. He added that the Fed had a narrow path to utilize the powerful tools at its disposal, and it was responding quite well.

Blankfein said that the Fed was left with no alternative but to raise interest rates and slow down consumer demand. And the resulting price rise will be quite oppressive and difficult for families in the lower-income category.

In this depressing scenario, the prospect of another federal stimulus check seems unlikely, given its potential to further push inflation rates.

The Republican States Such as Florida Paying Stimulus Checks From Federal Relief Funds, While Blaming President Biden For The Inflation

But several states have moved in to bring relief to their residents in the form of state stimulus checks. They are targeting communities most affected by inflation, the highest in 4 decades, and the resulting rise in prices of essential items and gasoline.

While some states have mulled stimulus checks aimed at directly addressing the price of gasoline and rising prices, other states, including Connecticut, have gone for a $250 child tax credit check after getting the green signal from the state legislature.

The overheated job market has caused a significant increase in the risk of recession. Most states are awash in funds after a quick economic rebound in 2021 and a $350B infusion of stimulus check funds from the Federal administration. This infusion was allocated to cities and states as part of the American Rescue Plan Act signed by President Biden in March 2021.

Most states are presently going for tax cuts instead of direct stimulus checks. Florida Governor Ron DeSantis was the latest to join the bandwagon with a $1.2B tax cut, made possible mostly due to the federal pandemic relief funds of $8.8B. But the Republican governor blamed the federal administration for the inflation, which he blamed on the stimulus check and the subsequent child tax credit stimulus checks.

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