With the federal stimulus checks on hold, the state governments have moved in to alleviate part of the pressure felt by citizens due to record inflation. It has been felt across all sectors, notably an unprecedented rise in the price of gasoline and groceries, with the price of the former doubling in two years.
The rise has saddled millions of people who commute long distances for work, cutting deeply into monthly expenses. It was a rare combination of geopolitical reasons and economic forces that manifested themselves in creating a sudden rise in global oil prices. Russia is the third-largest producer in the world, and the sanction imposed by the NATO countries was bound to boomerang on the American economy.
Before the pandemic, filling up a mid-sized sedan cast cost a mere $38 at $2.5 to the gallon. It went down further, and you could fill up the same car for $29, but people were not traveling.
End Of Pandemic Heralds Rise In Gas Prices Even As Stimulus Checks Dry Up
The availability of vaccines changed all that as people felt comfortable traveling again. The demand saw a sharp spurt, but supply failed miserably as the logistic part was yet to return to normal. Prices near the $3.5 mark though they stabilized in February 2022. And then the war in Europe happened, and a full tank went up to $90.
Gas prices are extremely sensitive to external factors like the distance from a refinery, state gas taxes, and international situations. Though prices have cooled down a bit, the disparity in prices will continue to plague the country.
While the federal administration has released oil from the Strategic Petroleum Reserve, states have called for a suspension of gas taxes to temporarily halt the rise in prices. The Republicans have stressed an increase in domestic production to offset the spike in prices.
New York is the first state to respond to the increase by declaring a gas tax holiday that started on Wednesday. It automatically cuts the price of a gallon of regular unleaded by 16 cents. But that will not be directly reflected in your prices.
The price was $4.934 on Wednesday and the American Automobile Association said that the price cut will be reflected in Thursday prices. The state has suspended the gas tax for the remainder of 2022.
Us Stares At Recession With As Spending Continues To Slow Down
With inflation standing at 8.3% at present, prices of most essential commodities are at record levels, especially grain, fuel, and utilities. And there are no signs that things will improve in the immediate future.
The Fed Reserve has responded by increasing interest rates to arrest the high inflation rates. But such a move might not have any major effect before 2023. Several factors remain outside the control of the President. The War in Europe has led to many vital products getting struck due to sanctions and blockades. The recession seems imminent at this stage.
Several economists have blamed the stimulus check for contributing at least partially to inflation. But even as the federal administration moves away from further stimulus checks, American states have moved in with state relief measures from their budget surplus and funds received under the American Rescue Plan Act signed by President Joe Biden.
Despite A Halt In Federal Stimulus Checks, President Biden Moves To Cut Student Loan
The President is expected to announce the forgiveness of $10,000 in student debt for graduate students with earnings below a specified limit. There has been a change in the announcement of the timings. Originally planned to be uncovered last Saturday, the shooting in Uvalde has led to the postponement of the plans. There has been no official confirmation of the existence of the forgiveness proposal.
It is estimated that the $10,000 relief check would be only for people earning below $150,000. That would enable 97% of graduates to qualify under the plan. The total cost of the forgiveness plan could come to $230 billion under this plan.
There are no clear indications that the payments will resume after August, as the current break is slated to expire. If interest payment resumes, the doing away with the $10,000 in student loans may see an identical match in the interest on the loans. This would make the plan appear more of a temporary measure compared to how massive the student debt loan crisis is in America.
Alexandria Ocasio-Cortez has tweeted that the relief of $10,000 in student loans will benefit those who owe the least. But the most despairing student loan borrowers will see no improvement in their situation as the interest charged will negate that waiver. She said that the administration can do much better than that.
States Move In To Protect Residents From High Inflation With Stimulus Checks
While several states have proposed state stimulus checks to protect residents from inflation, a few states are slated to start relief measures in June, having already pushed through legislation on the issue.
Maine and New Mexico are expected to pay in June as they have pushed through the bill and will send extra COVID-19 relief stimulus checks this month.
The first round of the $850 Maine relief check will go out to residents in June. Those who have filed their 2021 stimulus check will get their stimulus checks immediately. People have until end-October to file their 2021 returns, but their payments will be delayed and will be sorted out on a rolling basis by the state.
Individuals who have a federal AGI below $100,000 as individual filers and $200,000 as joint filers will receive their stimulus checks from the state. Around 858,000 residents are expected to benefit.
New Mexico will also roll out tax rebates in June. Under measures approved by the state legislature earlier, a $250 stimulus check will be given to single filers while joint filers will get double that amount. The second payment of a similar amount will go out in August.
Other states that are considering similar stimulus proposals for residents include Minnesota, Colorado, California, Hawaii, Kansas, and Pennsylvania. But the measures are yet to be passed into law.
Other measures that could benefit people affected by the economic downturn are homeowners across the US. They will be eligible for financial relief under the Home-owner Assistance Fund. It will help avert mortgage defaults and delinquencies, utility loss, foreclosures, and displacement experienced by homeowners who face financial hardship after the onset of the pandemic.