Consumers have been battling with sky-high living costs for several months now as a result of runaway inflation. And fresh research indicates 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, increased 7.9 percent on an annual basis in February. This is the index’s highest annual increase in more than 40 years. And, unsurprisingly, increasing groceries, housing, and gas prices all contributed to February’s higher total.
And, while we’re on the subject of gas prices, international tensions aren’t helping matters. Earlier this week, the average price of a gallon of gas reached $4.17, an increase of $0.50 from the previous week. And now, experts are warning that gasoline prices could reach $4.50 per gallon by May.
All of this has many consumers wondering whether legislators would step in and provide some form of assistance to those in need. Americans received a sizable stimulus cheque and monthly Child Tax Credit payments last year. However, should we anticipate comparable assistance in 2022?
Consumers may need to brace themselves for difficult times.
When the American Rescue Plan was signed into law in March 2021, the US economy remained in disarray and unemployment remained high. A year later, despite surging prices, the overall economic picture is much more optimistic. Unemployment has decreased, employment has increased, and earnings have increased – albeit at a slower rate than inflation.
In sum, given present economic conditions, it’s difficult to argue for another wide round of stimulus reductions. As a result, Americans should not anticipate this.
On the other side, legislators are committed to extending the expanded Child Tax Credit through 2022. The credit’s maximum value was increased last year from $2,000 to $3,000 for children aged 6 to 17, and $3,600 for children under the age of 6.
Notably, half of the Child Tax Credit was paid in monthly instalments from July through December. Those monthly payments have been ruled out thus far this year. However, Americans should not write off the possibility of reviving those payments.
Legislators must find a way to agree on the increased credit in order to persuade sceptics. This might involve imposing stricter income limitations on eligibility or instituting a work requirement – both of which were not mandatory in 2021.
Taking these procedures may result in a reduction in the number of people qualifying for the enhanced credit. However, it may also serve the critical purpose of putting additional money in the hands of Americans at a time when they are most in need.
What comes next?
The Build Back Better initiative, which included legislation supporting an increased Child Tax Credit in 2022, is all but gone. However, senators can still attempt to negotiate specific components of Biden’s big spending measure, including the credit, in order to preserve that financial lifeline.
There is a significant likelihood that uncontrolled inflation will continue for an extended period of time. And, while it may be tough to justify another round of stimulus checks, it is not nearly as difficult to argue that parents of children should continue to receive the assistance they received last year.