In recent weeks there has been a growing conversation building up around the possibility of a recession. With the nation facing record inflation, it is difficult to predict which way the economy is headed. Americans, especially the low and moderate-income sections, are despondent in the absence of further stimulus checks. The Federal Reserve has raised its benchmark interest rates by three-quarters of a percentage, its most aggressive hike after 1994.
The country was gradually easing back to normality and the economy began to turn around even as the third stimulus check was declared in March 2021. The economy boomed in the last two quarters of 2021, but then inflation reared its head and as the New Year dawned, it had risen to record levels, the highest seen in the past 4 decades and more.
Federal Reserve Takes Strong Action To Counter Inflation Even As Stimulus Checks Dry Up
With gasoline prices almost doubling over 2020 rates, and other essential items registering a strong increase in prices, the Federal Reserve launched its biggest broadside against inflation in the middle of June. It raised the benchmark interest rates three-quarters of a percentage point in a move that is being equated to the most aggressive hike after 1994.
Fed Chairman Jerome Powell has revealed that more decisions will be made meeting by meeting and the Fed will continue to communicate its intentions. He said that they want to see progress. Inflation can go down only once it flattens out.
The nation can expect a much more aggressive path of increase in the rate in the weeks ahead to arrest the high inflation as it maintains the fastest pace since December 1981.
Economic Activity Picks Up Gradually
The Federal Reserve has stated that the overall economic activity has shown signs of picking up after edging down in the first quarter of 2022. Job gains have also been robust in recent weeks and the rate of unemployment remains low.
But inflation has stayed elevated and reflects an imbalance in demand and supply. Many economists have linked this scarcity to the stimulus checks, particularly the Economic Impact Payment, or the third stimulus check signed by President Biden in March 2021.
The sudden input of large sums of money into every citizen’s hands did save people from the ravages of the pandemic. For the first time, many families had the luxury of regular food on the table and were able to buy beyond their everyday necessities.
Many families even settled old debts, including high-interest credit cards and similar debts. Families also saved money, many buying into stock, thus propelling stock prices.
But this glut of money also created soaring demands as people began to shift from services to goods. But the production and supply disruption caused by the pandemic led to a shortage of supply which led to an increase in prices across the spectrum.
The hardest hit were gasoline prices, which almost doubled in a space of two years. Essential items such as foods also saw a steep rise along with rent and utilities.
Despite Tough Times, A Fourth Stimulus Check Remains Elusive For Now
Despite the desperate situation, the federal administration has not been able to convince the Congress of the need for a fourth stimulus check.
Though there have been sustained moves by Congressmen and the common public, it has been apparent for months that any direct stimulus checks, enhanced unemployment checks, and expanded tax credit stimulus checks are a thing of the past.
President Biden has been further constrained as the Senate is split in the middle and two of his party senators have constantly opposed moves for granting further stimulus check relief to citizens.
States Move In With Stimulus Checks Of Their Own
Around a dozen states are finding a middle ground and have come up with stimulus checks of their own. States that have actively considered new checks for their residents or have already sanctioned one, include Maine, New Mexico, California, New York Hawaii, Illinois, Georgia, Delaware, and more.
Maine was among the first states to help residents deal with the record inflation costs. The state began issuing stimulus checks of up to $1,700 to families who qualified as per their 2021 income tax returns.
More than half of those eligible for the state stimulus check have received their payments and more are on the way every week. People who have filed their 2021 returns by May will receive their payments by July 2022.
Officials in the Maine administration have said that the stimulus checks are expected to be a great help for low and moderate-income households as they struggle t meet food, housing, and energy expenses.
Maine has offered the highest payout among states. Other financial relief measures have been worked out by the state administration in the supplemental budget of Maine for fiscal 2022-23.
Residents who have a federal AGI of below $100,000 as single filers and $200,000 as married couples filing jointly will receive the stimulus checks.
Around 200,000 stimulus checks are being delivered every week after 5,000 were sent out in the first week.
Rebate Payment For New Mexicans
New Mexicans may be eligible for rebate payments from the state that could go up to $1,500 for families and half that for individual filers. The payments have been passed under two laws that have provided relief payments and rebates for residents of New Mexico.
Residents who have filed their 2021 returns are eligible for the rebate. Individuals will receive a $250 rebate stimulus check in June, and another $250 in August while the July check of a similar amount will be paid depending on the income.
For eligible families or household heads, the rebate stimulus payments could go up to $500 in June and August, and another $500 in July, but this time linked to the Adjusted Gross Income. The date you receive the payments will depend on when you have filed your 2021 income tax returns.
May 31, 2022, was the cut-off date for receiving the $500 relief payment in the initial round. But residents still have time for filing state income tax returns. People who do not receive their stimulus checks in 2022 can get the payments in 2023 by filing their 2022 tax returns before May 31 next year.