Even though you shouldn’t anticipate receiving a fourth stimulus check from the federal government, further funds could yet be forthcoming.
Millions of residents will soon get relief payments, according to proposals made public by many states, including Colorado and California.
However, apprehension coexists with exhilaration. Could well-intended state stimulus measures lead to even higher inflation?
As part of the CARES Act, the government released the first COVID-19-related stimulus check in April 2020.
To help them deal with the high unemployment rate and effects of the U.S. coronavirus, eligible Americans received up to $1,200 in aid.
Later, the government sent people whose salaries fit the eligibility requirements two extra stimulus checks, each worth up to $600 and $1,400.
However, the economic climate today is very different from what it was then. The unemployment rate, which peaked in April 2020 at 14.7%, is currently 3.6%.
In the meantime, inflation has exploded to a 40-year high. Gas, grocery, and rent costs have increased to practically unaffordable levels as recession warnings proliferate.
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According to some experts, the first three rounds of stimulus checks were responsible for that increase in inflation.
This concern is once more at the forefront of people’s minds now that states are disbursing more money.
According to Nicholas Economides, an economics professor at the Stern School of Business at New York University, “issuing these checks to the general people moves in the wrong way.” It will drive up inflation.
The following information on state stimulus checks and their potential economic effects is important to know.
Who is eligible for state stimulus payments? The state budget that California Governor Gavin Newsom signed on June 30 would give direct tax refunds of up to $1,050 to 23 million residents of the Golden State.
The objective is to fight inflation.
“Global price rises. increasing costs We are aware that life is challenging. Therefore, according to a news release from Newsom’s office, we’re returning $9.5 billion.
The Golden State is not by itself. More than 236,000 households in Oregon got the Earned Income Tax Credit on their 2020 taxes, and the state government announced in June that it will give them one-time payments of $600 each.
Governor Jared Polis of Colorado announced that this summer, Coloradans would get $750 cheques for single filers and $1,500 for joint filers.
Everybody in our state is suffering the effects of growing costs, and Polis declared last month, “I won’t allow the government to sit on public money when it could be utilized to make life a little bit simpler for the people of our state.”
Other states that have committed to providing stimulus cheques of various quantities to eligible citizens include Delaware, Georgia, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, South Carolina, and Virginia.
Your stimulus check might be best invested in a High-Yield Savings Account.
Saving money with high yields will be advantageous to you in the long run if you are planning for the future.
State stimulus payments: Will they worsen inflation? There is little doubt that the federal stimulus cheques helped many families financially because they were sent at a time when many individuals were in dire need of them.
However, experts didn’t keep their worries about the effect on the economy to themselves.
The Washington Post published an opinion piece by economist and former Treasury Secretary Lawrence Summers regarding the dangers of the amount of the third stimulus checks.
Summers started in February 2021 that there was a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels would trigger inflationary pressures of a kind we have not seen in a generation, which would have an impact on the value of the dollar and financial stability.
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Some experts claim that the federal stimulus payments did in fact contribute to inflation, especially now that they are in the past.
According to a recent assessment released by the Federal Reserve Bank of San Francisco, fiscal support measures intended to lessen the economic effect of the pandemic may have increased inflation by around three percentage points by the end of 2021.
And earlier this year, Jason Furman, a Harvard University professor and a former senior economic adviser to President Barack Obama, told ABC News that the reason why American inflation is higher than that of other advanced nations is “probably because we’ve had a larger fiscal reaction.”
