Inflation has been a pain for every American, but it is one of the reasons why eligible residents are able to receive a stimulus payment. Will it be a hindrance if inflation slows down?
In 2022, inflation was a serious issue for consumers. The Consumer Price Index (CPI), which monitors changes in the cost of consumer goods, climbed 9.1% year on year in June of that year.
Inflation Rate Drops
However, the rate of inflation has progressively dropped since then. And in December 2022, the CPI was only 6.5%. That’s still a high reading in historical terms, but it’s far lower than 9.1%.
Cooling inflation is certainly a good thing. People are more likely to struggle less and accumulate less credit card debt if it costs less to function and fund essential living expenses. Will, however, falling inflation rule out stimulus payments in 2023?
It’s a common misperception that inflation determines whether or not stimulus payments reach Americans’ bank accounts. Rather, stimulus assistance is contingent on the status of the economy, specifically unemployment and consumer expenditure.
When unemployment is high and consumer spending begins to fall, politicians can utilize stimulus cheques to inject money into the economy to give it a boost as needed. When unemployment is low and consumer spending is stable, there is usually no need for stimulus payments — why would there be?
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Stimulus Payment In 2023
There’s always the risk of a recession, which no one wants. Financial experts have been warning about one for months, so we can’t rule out the possibility of economic conditions deteriorating significantly.
If the unemployment rate rises significantly, a stimulus package may be implemented. But that is certainly not what anyone wants.
However, falling inflation may be an indication that we will be able to escape a recession. If inflation continues to slow, the Federal Reserve may reconsider its rapid interest rate hikes. This could prevent consumers from being compelled to severely reduce their spending. And, if spending remains stable, we should be able to prevent a recession.
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