More States Move In To Help Out Residents With Inflation Relief Stimulus Checks: How Much Will Such Payments Worsen The Inflation Situation?


The federal administration provided much-needed relief during the pandemic year of 2020 and the following year. numerous stimulus checks and other packages helped people stay away from an immediate descent into poverty and homelessness as the world economy plunged into recession.

In 2020 alone the administration pumped in a whopping $271.42B in direct stimulus checks, with around 162M payments going out at an average value of $1,672.02. a slightly higher number, 163.5M went out in 2021. The total amount sent out reached $390B at an average of $2,384.55 for each recipient. The two combines to $4,060.58 for each American over these two years. But the amount varied by state.

The stimulus check amount was supplemented by the extended unemployment benefits that were extended to September 5, 2021. The expanded Child Tax Credit stimulus checks also proved to be a great help to families with children, especially as it was given as an advance. 

6 months of stimulus checks, of an equal amount of either $250 or $300 per child, went out to families between July and December 2021 as half the advance on rebate for the 2021 income tax return.

Was Fear Of Inflation A Reasons For The Halt To Federal Stimulus Checks

For the first time, even non-filers benefitted from the CTC stimulus check. but December 2021 also proved to be the end of all forms of stimulus checks. The stiff opposition of the opposition Republicans and the fear of inflation persuaded the Biden administration to stay away from further pandemic relief payments and instead concentrate on the Build Back Better bill to strengthen the American infrastructure.

Many Americans found a pleasantly unexpected reprieve from financial worries as they received multiple stimulus checks along with expanded unemployment insurance and other relief measures. For the first time, Americans had to save in their bank which was substantial by their standards.

This sudden surplus led to people spending more on goods than on services even as supply and manufacturing bottlenecks led to a slowdown in supply across the world. Products that came in from outside the US and complex products like cars that required the sourcing of parts from various regions were the most affected. Their prices rose abruptly due to this demand and supply gap.

The war in Europe worsened matter as the third bigger oil producer was suddenly isolated by the west, especially America. It led to a rise in prices of oil around the world, but more so in the US.

People who used to live paycheck-to-paycheck suddenly found that they could pay off their debts, save a part of the relief payments and still have enough to buy non-essential items, things that they could term as a luxury, especially in a pandemic period.

But things suddenly turned for the worse by the last quarter of 2021 and continued to worsen. High prices of gasoline and other essentials that outpaced the rise in wages ensured that people had to dip into their savings.

Gas became so expensive that people are buying just a quarter of a tank at a time. Savings have depleted for renters and they are being forced to move in with roommates or share their homes even as home rents continue to rise in cities across America.

Now the economy appears set to slow down sharply in a way that will limit any growth in wages and also cause job losses across sectors. And prices continue to remain elevated.

The Sudden End To One Stimulus Check After Another Led To An Acute Crisis

And instead of sending more stimulus checks, policymakers are engineering a slowdown. Earlier it was a global pandemic. But now it is persistently high inflation and the main way that the government knows to solve this issue is by inflicting a lot of economic pain.

Economists had warned of a looming cliff even when the first round of stimulus checks began to expire in the summer of 2020. They said that more federal aid was necessary as the economy was yet to recover to pre-pandemic levels and the nation remained mired in the economic downturn caused by the pandemic.

They repeated the warning as the unemployment benefits were abruptly pulled, throwing millions of workers into trouble. Then again in January 2022, the expanded CTC stimulus check came to a halt despite President Biden’s efforts to extend it through 2025, thanks to Republican obduracy.

The end of these relief programs that included the enhanced nutrition benefits hurt low and moderate-income families and individuals.

States Move In With Relief Against Inflation

States continue to send out stimulus checks to residents as a relief against record inflation figures. California and Florida joined the Bandwagon last month and now Massachusetts is set to send out a stimulus check but lawmakers have failed to agree on the amount. But Governor Charlie Baker‘s office has indicated that residents would receive around 7% as a refund of their 2021 income tax, and the exact minimum amount will be determined soon.

Massachusetts is just one among the many states offering stimulus checks or tax rebates to tackle rampant inflation and the looming specter of a recession.

Florida has lined up a $450 stimulus check for qualified families with children, with related and non-related caregivers also among those eligible among the 60,000 odd beneficiaries.

Around 18 states have already initiated the process of sending out stimulus checks, and around 6 states have already begun providing relief to residents.

California is going ahead with a middle-class tax refund that could be worth up to $1,050 for low-earning families filing income tax returns jointly. This maximum amount will go out to married couples with children. The payment will be made through debit cards or direct deposits. The payments will come out of the $97B budget surplus enjoyed by the state, thanks to a booming economy in 2021. Payments could start as early as October 2022.

Residents in Virginia will receive a one-off $250 stimulus check as individual filers with joint filers receiving double that amount.

Colorado residents who have filed their 2021 income tax returns will receive a $750 stimulus check by the end of the third quarter. Joint filers will receive double that amount.