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Friday, June 2, 2023

US Economic Crisis Deepens As Stimulus Checks Are Stopped And Inflation Force Even Middle-Class To Live Paycheck To Paycheck

The economy has come to such a stage that only the top 10% in the US income and wealth scare are insulated from the current economic challenges. They are the only ones protected from the headwinds affecting the other 90% of Americans who are in desperate need of a stimulus check.

The rich are good at being rich and have become benefitted from the pandemic. But while they hire people and create some jobs, they do not have a discernible impact on an economy the size of the US.  A few Americans have managed to avoid being stuck in the lower tier.

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Since the 2008 financial crisis, the Federal Reserve and the federal government have engineered economic rescue efforts by deficit spending and liquidity injections that total trillions of dollars. This deluge of cash staved off successive economic collapse and total financial crisis and can at best be termed as disaster aversion.

The present problem is that the economy is driven by consumer spending but the low and middle-income groups comprising over 90% of the population do not have enough money. The stimulus checks were a stop-gap method, but only jobs can get more money into the hands of a larger number of Americans consistently.

Stimulus Checks Are Not The Long Term Solution

The stimulus checks put extra money in more pockets and created the demand for more stuff in the first two quarters of 2021. It resulted in economic expansion and required an increase in hiring and manufacturing. It was a great formula for an economic revival, but it was transitory.

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Most of the money that has been spent in 2021 has resulted in temporary relief for those who received it. But thee has been very little effort in terms of long-term or sustained effect. The relief was necessary, but for the lack of an ongoing stimulus to spur growth, the impact faded quickly.

Had a part of the government funding been spent on infrastructures such as repairing highways and bridges, people would have been hired in large numbers and would have boosted the steel, concrete and allied industries. They would have increased commerce and added to economic growth. The same goes for long-term investment in education, energy infrastructure, and research and development.

The soaring inflation has gripped even the middle and upper-middle-class citizens. Sustained increase in gas and food prices has resulted in consumers of all income segments increasingly being forced to drastically cut back on spending and living paycheck to paycheck. And that number has increased to 61% in April against only 52% a year back.

That means that 3 out of 5 families spend all their income on monthly expenses and have nothing left at the end of the month. And this number includes people earning $250,000 annually.

State Stimulus Checks Only Source Of Relief At Present

With inflation showing no signs of easing, states are being forced to go in for temporary relief measures, in line with the measures taken by the federal administration in the past two years. With no indication of an increase in wages, they are the only way that people have managed to stay out of poverty in the past two years.

The pandemic-driven inflation has left people even more despondent as they grapple with increased costs across all sectors including gasoline and groceries.

The governor of Maine, Janet Mills has ensured that Maine residents receive the resources they need to deal with such high costs. As an immediate measure, Governor Mills has proposed giving back over half the budget surplus to taxpayers in Maine through a direct $850 stimulus check.

The proposal by the Governor was backed by the Maine legislature and the stimulus check will be sent to an estimated 858,000 residents for a total expenditure of $729.3M of taxpayer money.

Eligibility For The $850 Stimulus Check

To be eligible for the Maine stimulus check, individuals should have filed their state income tax returns for 2021 by the end of October. They should also be full-time residents of the state. so even though the last date for filing has passed, residents can take advantage of the extended date to avail of the stimulus check.

To be eligible for the check, residents must not be claimed as dependent and must have an adjusted gross income of below $100,000 if they are filing as individuals, and $200,000 if they are filing jointly as married couples. Heads of households should have an AGI below $150,000 to avail of the offer.

The relief checks will go through the US Postal Service and will be mailed to the address provided in the 2021 income tax return. It will be redirected to any forwarding address filed with the postal authorities.

People can update the address on their record with the Maine Revenue Services by submitting in writing the details.

Families In Mexico To Receive Their Stimulus Checks This Month

Governor Michelle Luhan Grisham of New Mexico has announced that the state will be refunding millions in relief to residents. This will help protect their wages and help them handle the mounting prices of gasoline, groceries, plus other essential items.

The rising consumer expenses have strained home budgets across the US and the state Legislature has been quick off the mark, approving numerous rebates for taxpayers in New Mexico. There are also relief measures for residents who are not mandated to pay taxes due to low earnings.

The measures that have been put in place comprise a refundable tax refund of $500 for couples who file joint returns and $250 for individual filers, including married couples who file separate returns. The payment will be first made in June and repeated in August.

Residents who do not need to file income tax returns will get a $500 stimulus check as individuals and $1,000 for households. These payments have been approved at a special session of the New Mexican legislature and will be given on a first come first serve basis.

Residents have been encouraged to file their state income tax returns as it may lead to additional benefits. Application for relief payments is available through the Human Services Dept. of the state.

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