Most Americans will get little or no extra aid from the government. Individuals and the economy as a whole may not be ready to remove the training wheels as the country enters its first year without stimulus since the outbreak.
To better comprehend the situation, we asked experts from several fields what the country might anticipate in the coming year — and if previous stimulus has adequately prepared the country.
Stimulus Provided Both Relief and Pain, and It’s Now Coming to an End
The government reacted to the epidemic with unprecedented financial aid. Three large stimulus measures saved millions, but they had unforeseen consequences.
“The pandemic relief programmes gave a lifeline to unemployed people,” said Peter C. Earle, economist and research fellow at the American Institute for Economic Research. “But they also contributed to the recent shipment issues. Hundreds of cargo-laden ships are waiting for days to dock as a result of the stimulus payments.
But it looks that the wheels are no longer squeaky enough to demand another injection of oil.
“Right now, the economy appears to be doing well,” Earle stated. The concept of sustaining stimulus or support programmes — such as federal increases to state unemployment — appears superfluous.
The Poor Will Suffer the Most if There Is No Stimulus for a Year
In April 2020, the CARES Act approved the first wave of direct payments to two types of recipients: those who had to spend the money immediately and those who may choose whether or not to spend it.
“These contributions moved directly into day-to-day costs like rent, food, and gas,” said Carter Seuthe, CEO of Credit Summit. “Those who could still work or were getting unemployment benefits spent them on longer-term costs. Debts were paid off and medical care was received that had been postponed owing to expense.
A year without stimulus will mean a loss of buying power for the second group.
With no tax breaks, expect customers to make fewer major purchases, says Seuthe.
Less immediate and more severe impacts will be seen by those in the first category, millions of whom were pulled out of poverty and food insecurity.
According to Choice Mutual CEO and founder Anthony Martin, “low-income households might suffer the hardest without stimulus payments or other pandemic-relief programmes.” “They could get into deeper debt if they can’t utilise stimulus money or more Child Tax Credit advance payments to pay expenses or establish an emergency fund
“Expect rates of poverty, food insecurity, and chronic health conditions to rise,” said Seuthe.
The Child Tax Credit Has Saved Many Families From Financial Ruin — and It’s Still Alive and Well
The advance child tax credit payments had the biggest and most immediate influence on the financial health of the ordinary American household, aside from direct stimulus funds.
“This money helped reduce child poverty and hunger because families who couldn’t afford basic essentials for their kids could now afford them, and those who could afford it could buy things like private tutoring to stay up in school,” Seuthe added.
Congress failed to enact legislation before December 31st, thus no credit in January. Beyond that, the credit’s future is unknown, and the outlook is not bright for those who rely on it.
Even though the chances are dim, Seuthe says there is legislation in the works to prolong the payouts.
Millions Benefited From Increased Unemployment, but the Country Is Now Back to Work
The other significant lifeline emerged from the crisis’s early mass layoffs – increased unemployment.
“These payments were vital in averting a catastrophic recession during the pandemic,” Seuthe remarked.
That will change after the Great Resignation and the labour market drama of 2021.
“The necessity for these benefits is linked to government-mandated company closures. So long as we don’t have another lockdown, our economy will probably be fine.”
Reduced Food Assistance and Medicaid will affect millions of people
Already relying on Medicaid and SNAP, the epidemic merely increased their numbers.
According to Coupon Ninja, these services were considerably extended in 2021 as part of a nationally financed attempt to assist battle disease transmission after a worldwide pandemic. “The programmes will be drastically reduced in 2022.”
So, what does it entail for their dependents?
According to the Center on Budget and Policy Priorities, the cuts will affect 14 million individuals. “Around 8% of the population.”
Trouble Is on the Way for Millions of Student Borrowers This Spring
Finally, federal law allowed millions of Americans to stop student loan payments without incurring new interest. After being extended multiple times, most recently in December 2021, the clock runs out on May 1.
This will be terrible for millions of Americans, says Melanie Hanson, editor-in-chief of EDI Refinance. “The present government opted to extend this programme by four months for no reason. Due of the long-standing student debt issue, this program’s termination triggered intense opposition.