When the United States finally began to lift the curfews imposed as a result of the virus in 2021, the economy saw a strong rebound; nevertheless, in 2022, it found itself in a dilemma. This occurred as the United States gradually began to reopen its borders in 2021 after being quarantined because of the illness.
Congressional approval of big stimulus check packages in 2020 and 2021 was a major factor in keeping the USA from sliding into a worse recession or perhaps a depression. In 2020 and 2021, Congress authorized these check bundles. Yet, the steady rate of inflation was mostly attributable to the infusion of capital into firms and individual families.
The present conundrum policymakers face is deciding whether or not giving Americans more spending power would increase inflation or help them better cope with the effects of price increases. This article includes a summary of the minor stimulus payments being discussed or granted at the state and local levels, as well as the opinions of a few industry experts on the subject. The question of whether or not to make these payments is now being discussed or has been resolved at the state level.
Whether or whether the $5 trillion injected into the American industry while the epidemic was still going on had a significant effect on the inflation rate is debatable, but the impact was undeniable. There is no denying this fact. The San Francisco Federal Reserve Bank projects that by the end of 2021, the inflation rate in the United States will have risen by around 3% as a direct result of the stimulus payments, and prices have continued to grow steadily since then. According to the Federal Reserve Bank of San Francisco, the stimulus payments will influence the economy until the end of 2021, leading to this conclusion.
Further Stimulus Checks Will Drive Prices Higher
Despite the end of the epidemic, the JPMorgan Chase Institute and the Washington Post report that U.S. bank balances remain higher than pre-outbreak levels. This is due to the distribution of stimulus check payments. Although the epidemic has ended, this is still the case. If this trend continues, it may indicate that future stimulus payments may not be as focused on meeting basic needs as they are on bolstering consumer discretionary spending, which might lead to even higher prices.
Findings from the United States Department of Health and Human Services, which concluded that government involvement during the peak of the epidemic kept 11 million Americans out of poverty, present the most persuasive justification in favor of extra federal stimulus check payments. These results show that extra government stimulus funding is required. These findings are based on empirical research using actual data. According to HHS, “economic impact payments under the ARP (American Rescue Plan) and unemployment compensation had the largest impact on reducing poverty” (DHHS).
Tax Policy Center senior research scientist Elaine Maag believes that additional government checks to stimulate the economy is highly improbable. She told Changing America, however, that such a stimulus check might be beneficial for Americans, especially those with lower-than-average incomes, as they face the impacts of growing inflation. Maag claims that people in such a position tend to have fewer savings to cover emergencies. That is why, as Maag puts it, “delivering some form of financial gain now would sort of shielding them from the inflation that is happening around them.”
Americans Need Additional Money To Cope With Rising Prices
As a former presidential candidate, Andrew Yang thinks the stimulus check packages are being unfairly criticized for their potential to contribute to inflation. Yang thinks so. It was reported that Yang told CNBC, “Money in people’s hands for a couple of months last year was, in my judgment, a very, very tiny influence.” However, Yang pointed out that much of the money that was in people’s hands had already been spent for a very long time, therefore the inflation rate was not a major concern. Even if inflation is still on the rise, this is the situation.
Yang has long advocated for the implementation of a universal basic income and he thinks that boosting the number of stimulus checks paid to American residents will help the economy remain stable during future crises and assist more people to escape poverty. For quite some time, Yang has advocated for a universal basic income system to be put into place.
State Stimulus Check Packages and Their Effects
Several states have opted to take matters into their own hands because the federal government has no plans to issue any further checks as part of its stimulus check package at this time. Even though the government has no intentions to print additional checks, this has occurred. Legislators in California, for instance, are ironing out the bugs in Gov. Gavin Newsom’s plan to send everyone in the state a check for $400 if they own a car.
Conversely, as part of Georgia’s economic stimulus program, Gov. Brian Kemp signed into law $250 stimulus cheques for single taxpayers and $500 checks for joint filers. These two payments are part of the state’s economic stimulus program. Some other state legislatures are also considering other proposals; they include those in Illinois, New Jersey, and Idaho, among others. Some states have such legislatures, whereas others don’t.
Due to the limited nature of the programs being given by the states, it is highly unlikely that the stimulus packages would cause any further increase in inflation. State stimulus checks typically top out at $500, with the vast majority going to people with lower incomes. In comparison, after many rounds of stimulus expenditure totaling trillions of dollars, the government distributed an average of $3,200 to each American citizen. These amounts may help the American people deal with inflation without contributing to its acceleration since they are more realistic and are chosen with specific goals in mind.