During the dreadful period of the epidemic, the federal government distributed millions of stimulus checks to Americans. The US Census Bureau reports that nearly 11.7 million Americans were helped out of poverty as the poverty rate declined from 11.8 percent to 9.1 percent.
With unemployment rates as high as 14.7%, the arrival of the stimulus package was timely. It is easy to overlook the relief it provided to a large number of families who had been forced to make difficult decisions in order to put food on the table. Many were forced to choose between skipping meals or essential medications.
The majority of Americans would have defaulted on their debts if the federal government had not immediately halted bank recovery.
However, the negative effects of the stimulus checks have outweighed any positives. This is especially true for the December 2021 and January 2022 stimulus payments.
According to research conducted by the non-profit SF Fed, consecutive stimulus checks may have contributed to up to 3 percent inflation in the United States.
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Since quite some time, inflation has significantly outpaced wage growth. The inflation was caused by the supply chain deficit, rising gasoline prices, and the European war. It is making it harder for low-income residents, especially those who received stimulus checks, to survive on a stagnant income.
In March of this year, inflation reached an all-time high of 8.5%, whereas wages increased by only 5.6% year-over-year. Inflation was fueled by the surge in demand for goods, which was fueled by the numerous stimulus checks in Americans’ hands.
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This, coupled with a decline in the supply of various goods ranging from food grains to meat, exacerbated the inflation problems of many citizens.