Update on the Stimulus Package: as Living Costs Rise, Americans Struggle in the Absence of Government Assistance

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Consumers have been battling with sky-high living costs as a result of severe inflation for several months now. Furthermore, recent evidence suggests that rising prices may be here to stay for the foreseeable future.

The Consumer Price Index, which monitors changes in the cost of consumer products on an annual basis, increased by 7.9 percent in February, according to the Bureau of Labor Statistics. This represents the highest annual increase in the index in more than 40 years. And, not surprisingly, higher grocery, shelter, and petrol prices all had a role in the increase in February’s overall figure for the month.

Concerning gas prices, the tensions in the Middle East aren’t helping matters in that aspect either. This week, the average price of a gallon of gas reached $4.17, representing a $0.50 rise over the previous week. According to analysts, gas costs could reach $4.50 a gallon by the end of the year in some areas.

In the wake of all of this, many customers are asking whether lawmakers will step in and provide some form of assistance to people who are in financial difficulty. Last year, Americans were treated to a large stimulus check as well as monthly payments for the Child Tax Credit. What about comparable assistance in 2022? Should we expect to see something similar come our way in 2022?

Consumers may have to brace themselves for difficult times.

When the American Rescue Plan was signed into law in March of 2021, the economy of the United States was still in a state of disarray, and unemployment was still at an all-time high. Despite rising prices, the broad economic picture is much more optimistic a year after the start of the recession. Unemployment is down, job growth is on the rise, and wages are increasing — albeit at a slower rate than the rate of inflation.

Overall, given the current state of the economy, it’s difficult to make a compelling case for another round of broad-based stimulus cheques. As a result, Americans shouldn’t expect anything like that to happen.

On the other hand, lawmakers are still committed to extending the expanded Child Tax Credit through 2022 as originally planned. The maximum value of the credit increased from $2,000 in 2020 to $3,000 for children aged 6 to 17, and $3,600 for children under the age of six, as of the previous year.

Equally important, half of the Child Tax Credit was paid in monthly installments, with payments arriving in bank accounts between July and December of each year. So far this year, such monthly payments have been ruled out of consideration. However, a resumption of those payments is not something that Americans should dismiss out of hand.

Lawmakers must find a way to reach a compromise on the increased credit to persuade those who are opposed to it to support it. As a result, income limitations could be tightened or a job requirement instituted, both of which would be new in 2021 and would make eligibility more difficult to obtain.

Following these actions may result in a reduction in the number of people who are eligible for the enhanced credit rate. However, it may also serve the essential purpose of putting additional money into the hands of Americans at a time when they are most in need of it.

What comes next?

The Build Back Better plan, which includes legislation to support an increased Child Tax Credit for 2022, is all but dead in the water at this point. However, politicians can still attempt to negotiate individual components of Biden’s large spending package, such as the credit, to ensure that this financial lifeline is made available to the public.

We may expect rapid inflation to continue for an extended period, if not forever. It is difficult to argue for another round of stimulus checks, but arguing that parents of children should continue to receive the support they received last year is not nearly as difficult as arguing for another round of stimulus checks.

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