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Is a New Round of Stimulus Checks Necessary to Help Americans Cope With Inflation?

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The economy in 2022 is at a crossroads, following a flourishing rebound in 2021 when America escaped from the pandemic’s lockdowns.

Congress issued massive stimulus packages in 2020 and 2021, which helped the US avoid a major recession, if not a depression.

The infusion of capital into enterprises and individuals, on the other hand, aided in maintaining the rate of inflation.

The question now before policymakers are whether putting more money in Americans’ pockets will increase inflation or help them to better deal with growing costs.

Here are some expert comments on the subject, as well as a look at the smaller stimulus payments that are either being debated or have already been approved at the state level.

While the exact amount is debatable, there is no doubt that the $5 trillion injected into the American economy during the pandemic had some impact on growing prices.

By the end of 2021, stimulus payments had a demonstrable effect of adding about 3% to the US inflation rate, according to the Federal Reserve Bank of San Francisco, and prices have only continued to rise since then.

According to both the JPMorgan Chase Institute and the Washington Post, bank balances in the United States increased as stimulus monies were dispersed, and they are still higher than pre-pandemic levels.

This could imply that any extra stimulus payments will be directed toward discretionary items rather than basic requirements, thus pushing prices even higher.

Actual statistics from the US Department of Health and Human Services, which found that government assistance during the peak of the epidemic kept 11 million Americans out of poverty, is the strongest evidence for more federal stimulus.

“The most effective measures for relieving poverty were economic impact payments under the ARP (American Rescue Plan) and unemployment compensation,” according to the Department of Health and Human Services.


While another federal stimulus check is unlikely, Elaine Maag, a senior research fellow at the Tax Policy Center, told Changing America that it could help Americans cope with rising inflation, especially those on lower incomes.

These households, according to Maag, tend to have less money set aside for emergencies, so “delivering some sort of cash benefit now would sort of protecting them from the inflation that’s happening around them.”

Andrew Yang, a former presidential candidate, believes the stimulus packages have been unfairly blamed for rising inflation.

“Money in people’s hands for a couple of months last year — in my opinion — was a very, very minor factor,” Yang told CNBC, “in that most of that money has long since been spent and yet inflation continues to rise.”

Yang has long advocated for universal basic income, believing that increasing direct payments to Americans will help stabilise the economy during future crises and lift more people out of poverty.

While there are currently no more federal stimulus packages in the works, many states have taken matters into their own hands. California legislators are hammering out the details of Gov.

Gavin Newsom’s proposal for $400 checks for residents who drive cars, while Georgia Gov. Brian Kemp signed $250 stimulus checks for single filers and $500 checks for joint filers into law. Other state legislatures, such as those in Illinois, New Jersey, Idaho, and others, are debating various proposals as well.

State stimulus packages are modest in scope, so they are unlikely to raise inflation further. Unlike the federal government, which spent trillions of dollars over several stimulus rounds to provide most Americans with $3,200 or more, state stimulus amounts are often $500 or less, with many, targeted mainly at lower-income taxpayers.

These modest, targeted amounts may actually assist Americans in coping with inflation without causing it to rise further.

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