The end of the pandemic did not mean the end of economic misery for low and moderate-income households. The end of 2021 marked the culmination of federal stimulus checks in all their forms. The year ended with the end of the child tax credit stimulus check. The new year also marked the beginning of a rise in prices that was to continue for the whole of 2022.
The increase in prices in 2022 affected every product and service and was triggered by the economic disruption caused by the pandemic. The break in the supply chain and the demand and supply mismatch led to a scarcity of essential goods. The shortage led to a rise in prices that affected everything from groceries to gasoline.
The rise was relentless and beat 4-decade-old records. With the federal administration tied down in Washington politics the states, though not all of them, were forced to step in They provided some form of relief.
But the state stimulus checks were one-off payments and were not as comprehensive as the federal stimulus checks, especially the third economic impact payment under the American Rescue Plan Act.
The Rescue Plan was not limited to the third stimulus check of $1,400 for each eligible taxpayer and dependent. There was also comprehensive financial cover for companies. States, cities, local and tribal governments, educational institutions, and other organizations.
The rapid rise in prices and the prevailing high rate of unemployment played havoc with the finances of the vulnerable households living paycheck-to-paycheck. Many families had been able to build up financial reserves during the pandemic thanks to the multiple rounds of stimulus checks.
But these all evaporated with the record inflation that marked the whole of 2022. While around 20 states provided support to residents in 2022, some states have continued with their payments into the first quarter of 2023.
And the payments this year have not been limited to the spillover payments from 2022. Some states have announced fresh stimulus checks, though the payments have generally been marked for low-income families. Many of the payments are being pushed forward as test projects to test the efficacy of government support for marginalized communities, such as Hispanics and Blacks.
Social Security Payments Assume Importance In Absence Of Stimulus Checks
While the Social Security payments have always been s source of sustenance for the retired and the disabled, the pandemic has imparted a fresh layer of urgency to the payments. Generally, the eligibility for the Social Security stimulus check was that the beneficiary had to be unemployed due to no fault of her own. It meant that you lost the job as there was no available work.
Beneficiaries also had to meet wage and work requirements. It was referred to as a base period. The standard or basic base period used the wages earned in the first four of the last five completed calendar quarters before the beginning date of the unemployment claim.
But some of the eligibility norms were waived during the pandemic. further, some of the benefits were expanded or extended, the details of which were with the state unemployment office.
As of December 2020. Those who qualified for the unemployment benefits received n additional $300 every week. This payment continued for 11 weeks, starting at the end of December, and went on till September 6, 2021. The expanded Child Tax Credit stimulus check was the last of the federal stimulus checks and contend between July and December 2021.
Rise In Unemployment In 2023
There has been an update in the economic projections and outlook. The Federal Reserve has updated its outlook and has returned with a bleaker picture. It has been forecast that unemployment could rise by at least a percent.
The quarterly economic projection and outlook released by the Feds expect the median unemployment rate of 2023 to rise to 4.5%. the present national unemployment rate sits at 3.6%. but there is a vast difference across educational qualifications, race, ethnicity, gender, and a variety of other demographic groups.
For instance, the Hispanics and the Blacks always came off the worst when it comes to government aid. The same is the issue with hundreds of thousands who live below the poverty line.
The national unemployment rate blurs the distinctions across various demographic groups. It also strips away a lot of important contexts. Further, the Fed’s projection rarely provides insight into how these groups will be impacted by an increase in the unemployment rate that was partially spurred by the hike in rates.
Nobel Prize-winning economist Joseph Stiglitz warned that colored young men could see an increase in the rate of unemployment, and it is already higher than the national average. The rise could be as steep as between 15% and 20%.
Could The Child Tax Credit Stimulus Check Make A Comeback In Its Expanded Form?
While the Child Tax Credit stimulus checks got a major boost under the Rescue Plan. It was part of the Rescue Plan that put the massive $1,400 individual checks into the personal account of Americans. President Biden had planned to extend the stimulus checks into 2025 but was thwarted in this attempt by the Republicans and also by Senators in his party which included Joe Manchin.
And despite the considerable success the stimulus checks had in alleviating poverty in 2020 and 2021, they abruptly came to an end at the end of 2021. And not surprisingly individuals and households struggled financially when the Child Tax Credit stimulus checks reverted to their original value and form. This was especially true in light of rampant inflation.
But President Biden has once again revived hopes among low and moderate-income citizens. One of his provisions for the 2024 budget includes the expansion of the CTC stimulus check, back once again to its modified form, the form that it existed for a brief period in 2021. But his proposal is unlikely to see the light of day as he is up against a Republicans House and a Senate that continues to be finely split down the middle. But the fact that he has not given up on his pet proposal should encourage low and moderate-income residents.