State Stimulus Checks Continue In 2023: Over 9 Million In Line For Pending Federal Stimulus Payments

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Stimulus Check

The COVID-19 pandemic that affected the world was particularly severe in the US. It brought about business closures, calculation of major events, and forced companies to impose work-from-home policies. This triggered a severe economic downturn that forced the administration to declare a series of stimulus checks.

 Then President Trump dithered in imposing a shutdown in the early stages. His continuous denial of the crisis allowed the virus to spread throughout the nation. This sharp contraction and the deep uncertainty that underlay the course of the pandemic and the economy sparked panic among people.

People sought to hold deposits and only the most liquid of assets. This disrupted financial markets and threatened to make an already desperate situation much worse. The Federal Reserve was forced into a situation where it had to intervene directly with a broad array of actions. This kept credit flowing and limited the economic damage caused by the pandemic.

The measures undertaken included large purchases of the American government and other mortgage-backed securities. There were also lending to prop up employers, financial market planners, households, and local and state governments.

The cornerstone of the policy was the direct stimulus checks that concluded with the third stimulus check. This payment was declared under the American Rescue Plan Act signed by President Biden in March 2021.

By April 2020, just a month into the lockdown, the Federal Reserve stepped in aggressively. But it was around 3 months after the pandemic crossed over into the American mainland. Its Chairman Jerome Powell said that the state would deploy lending powers to an extent that was an unbelievable result even weeks ago.

Powell said that the federal administration and the Fed would combine to deploy these lending powers to an unprecedented extent. He assured that the Federal Reserve would continue to use its powers aggressively. This would continue till they were confident that the American economy was on the way to recovery.

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That month he discussed the goal set by the Federal Reserve through the end of 2021. It was to be the blueprint of the steps that followed through the next 21 months and led to a series of stimulus checks including the expanded Child Tax Credit stimulus check.  

The Federal Reserve Supports The US Financial Markets And The Economy

The Federal Reserve immediately cut its target for the federal funds rate. This is the rate at which banks pay to borrow from each other overnight by around 1.5 percentage points. This was decided at its meetings on March 3 and March 15, 2020. The funds rate was lowered as a result of this cut in the federal funds rate.

This move lowered the funds’ rate to a level between zero and 0.25%. The federal rate is a benchmark for various short-term rates. This also affects long-term rates, so this move helped support spending. This was possible as it led to lower borrowing costs for businesses and households.

The Federal Reserve also used the learning from the experience of the 2007-2009 Great Recession of 2007-2009. The Fed had initially revealed that it would keep rates at around zero. It aimed to do so till it was confident that the economy had left behind recent events and was on track toward maximum employment and price stability goals.

The End Of Federal Stimulus Checks In 2022

The December 2021 payment of the expanded Child Tax Credit stimulus check marked the end of further federal stimulus checks. the only payment remaining was pending stimulus checks and 50% of the expanded Child Tax Credit payment. The latter was paid with the income tax returns for 2021 in the first quarter of 2022.

The end of the federal stimulus checks coincided with the rise in inflation rates that continued through 2022 starting in the year’s first quarter. Americans found themselves in a situation similar to the pandemic period, and after. Wages failed to keep up with the rise in prices that affect all products and services. From groceries to gasoline, the price of goods touched record prices and this increase was relentless as prices kept increasing every week.

At one stage the inflation rate touched 9.1%, the highest since November 1981. People who had been saved by the federal stimulus checks for close to two years found solace in the state stimulus checks.

Close to 20 states have responded with various forms of inflation relief. This includes direct bank transfers, debit cards, paper checks, tax rebates, and relief from various sales and income taxes. 

stimulus check

But while the federal stimulus checks were for thousands of dollars, the state stimulus checks were severely limited. It was merely a temporary solace in the absence of sustained federal support, the likes of which had all but disappeared in 2022.

The state stimulus checks were not blanked grants and instead, the plans focused on specific groups and sectors. This included gas cards or payments based on various income thresholds. This helped temporarily alleviate the pain caused by the rise in prices of specific services and goods.

Among the earliest states was Alaska, and it was also among the most generous of payments. Residents received an annual stimulus check from the Permanent Fund Dividend program of the state. This year residents also received an extra energy relief stimulus check worth $650.

California was among the earliest states to decide on inflation relief payments. The payments were timed for the last quarter of 2022 and have continued into the festive season. Residents have received up to $1,050 and the stimulus checks were linked to the state Adjusted Gross Income for the 2020 tax year that was filed before October 15, 2021.

Around 90% of the payments will be completed by the end of 2022 and the rest is expected to be completed by the second week of January this year. The payments will go out to the individual with an AGI of less than $250,000 and joint filers with an AGI of less than $500,000.

The highest payments will go out to filers with a joint AGI of up to $150,000 and who have included a dependent in the 2020 income tax file. Colorado is another state that has continued its payments into 2023. The payments are also among the most generous among state inflation relief payments. Individuals get up to $750 while joint filers will get double that amount.