State Stimulus Checks Continue Into Festive Season: Inflation Rate Subside Moderately

stimulus check
stimulus check

Even as the state stimulus checks continue into the last quarter of 2022, there has been a marginal decrease in the inflation rate that has slightly eased the prices of goods including gasoline. 

Consumer prices rose less than anticipated for the second straight month this November in the middle of a decrease in the cost of healthcare and gasoline. There has also been a decrease in the price of second-hand trucks and cars. This has led to the lowest annual rise in inflation in over a year.

The overall consumer prices advanced the lowest in the past 15 months according to a report from the Labor Dept. on Tuesday. This will clear the way for the Fed to start scaling back on its interest rate hikes this Wednesday.  Americans continue to face higher costs for home rent but economists are hopeful of a moderation in 2023. The report comes even as Federal Reserve officials gathered for a 2-day policy meeting for the year.

The central bank is in the middle of its fastest rate-hike cycle in the past 4 decades since November 1981. It is expected to do away with its benchmark interest rate by around 50 basis points this Wednesday. This will break a string of 4 continuous 75 basis-point increases. But economists expect that the Federal Reserve will continue to maintain its tightening campaign of the monetary policy into the initial quarter of next year.

Senior economics Will Compernolle based in New York said that the overall improvement in the inflation rate has raised hopes of an easing of all-round prices. This could lead to the Fed not tightening rates at the expected rate next spring. But he warned that it is not the compelling improvement that Federal Reserve Chair Jerome Powell has talked about that will convince the Fed to pause hike in interest rates.

All Round Prices Have Eased In The Last Quarter Even As State Stimulus Check Continue

There has been a slight decrease in the consumer price index in November with a 0.1% easing after a 0.4% advance in October 2022. Economists had earlier forecasted that the consumer price index would increase by 0.3%.

Gasoline prices have also dropped 2% in November while the cost of natural gas has decreased along with the price of electricity. But there has been a marginal increase in the price of food by 0.5%, though it is the smallest since December 2021, after a rise of 0.6% in October. this points to a downward trend of overall prices that has been reflected in the inflation rate.

stimulus check
Stimulus Check

President Biden has welcomed the easing of gasoline prices and also the marginal decline in food prices leading to the festive season. He said that prices continued to be high but things were improving and headed in the right direction.

In the past 12 months ending November, the Consumer Price Index has seen a spike of 7.1%, the smallest advance since December 2021and follows a 7.7% rise in October. the annual CPI peaked at 9.1% in June 2022, the biggest rise in 4 decades since November 1981. But inflation has remained way above the Federal Reserve’s target of 2%.

News on the share market has also been positive with Wall Street rallying. The benchmark S&P 500 scaled to a 3-month high. The dollar has fallen against a slew of currencies while US Treasury yields have also tumbled.

State Stimulus Check Continues Into New Year

For many residents, festive season bonuses will be in the form of state stimulus checks as many states continue to give out tax rebates to help cope with high inflation that remains above the Federal Reserve target of 2%, a figure that has not been reached in the past two years.

Most states have completed sending their stimulus checks to eligible residents by the third quarter of 2022. But states such as California, Massachusetts, Colorado, and South Carolina have opted for the last quarter to send stimulus checks to their residents in the form of direct bank deposits, tax rates, paper checks, and debit cards. The payments have been convenient for residents as it coincides with the festive season.

Massachusetts began returning a $ billion surplus tax revenue starting November, the payments are equal to around 14% of an individual’s 2021 state income tax liability and are expected to continue being issued at least till the second week of December.  

South Carolina went for debit cards, direct deposits, and printed paper checks that will give up to $800 to residents starting in October and are expected to continue past the festive season. The income tax rebates met the approval of state legislators as part of the 2022 $8.4 billion state budget. Your state could be sending out a stimulus check or rebate and you need to keep an eye out for it.

Stimulus Check
Stimulus Check

California has expended the highest amount among all states in sending out inflation relief payments of up to $1,050 to around 23 million residents. It comes to around 60% of the total population. The payments will come in as either a debit card or a direct deposit.

The Golden State will send out 95% of the payments to go out by the end of December 2022, with the remaining payments expected to end by the second week of January next year.

The amount that residents of California will receive will depend on several factors including the presence of dependents, their tax filing status (individual or joint filers), and their Adjusted Gross Income as declared in their 2020 California state income tax returns.

The highest tax rebate amount is for married couples filing jointly with a combined  AGI of $150,000 for 2020 and who have included a dependent in the returns. Taxpayers should have filed their state 2020 income tax returns by October 15, 2021, to be eligible for the payments.

Residents with a 2020 state AGI above $250,000 individual and $500,000 as joint filers are not eligible for the stimulus check-type Middle-Class Tax Rebate. Colorado is another state that is giving out $750 stimulus checks to individual residents and $1,500 to joint filers under the TABOR Act. Residents who have filed their 2021 income tax returns by June 30 are eligible for the payments.

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