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Monday, August 15, 2022

Stimulus Checks Contribute To Inflation As per Economics Professor

This is known to everyone that the reason for inflation in the whole U.S. has more than one factor. A well-known professor at the University of Alabama, Dr. Joshua Robinson, stated that the idea of stimulus checks is the major reason why the U.S. is facing inflation. This is mainly because the concept of stimulus check was established to give money directly to the hands of common people so that they can meet their expenses during the Covid-19 Pandemic. 

The Relationship Between Inflation And Stimulus Checks

The inflation rate increased by 7.5% in 2022 as compared to the inflation rate in the previous year and a total amount of $20 billion was circulating in the U.S. economy. In the views of Robinson, the objective of stimulus checks was to tackle the great downfall in the economy by giving money to the people. However, the money was used to buy services and goods which made the price of the products go up gradually. 

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In addition to this, he also mentioned that approving the people’s money to spend on things put the entire country at risk of inflation. However, the reins must be pulled back a bit by the Fed as slowly as possible because carelessness can result in recession. If the concept of stimulus check is suddenly removed, the country will face a recession that will impact both the people and the economy. 

The Covid-19 pandemic resulted in an increase in the unemployment rate which though is mentioned as 14%, the actual number is close to 17%. This rate in unemployment basically means the phenomenon of depression. The professor of UAB believes that the condition of the U.S. will get back to normal within a year. 

In general terms, the meaning of inflation is a gradual rise in the prices of services and products, and this phenomenon results in the decline of the value of money.

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