The US economy has made significant progress in recent months, to the point that the national unemployment rate in December hit its lowest level since the epidemic began. However, everything suddenly came to a halt.
For the week ending January 15, new jobless claims increased to 286,000 from 231,000 the previous week. That was a big letdown in light of analysts’ expectations of only 225,000 new claims.
Nevertheless, despite this short setback, Americans should not anticipate another wave of stimulus checks in the near future. This is why.
A Brief Hiccup
While witnessing a dramatic increase in jobless claims is alarming, the fact is that a single week of higher numbers is unlikely to convince Congress to resume discussions about stimulus funds. Indeed, even if unemployment claims continue to rise over the next several weeks, it is unlikely that another wave of stimulus funds would touch Americans’ bank accounts.
While many people have yet to recoup financially from the pandemic’s impact, the truth is that the US economy is significantly better now than it was when the previous round of stimulus was approved. Additionally, while we may see a few weeks of increased unemployment claims in the short future, owing mostly to the omicron spike, the expectation is that the increase will be transitory.
At the moment, the omicron surge is ripping through the country. However, health experts are confident that the current wave of diseases will soon reach a zenith in locations where it has not already. Additionally, they are anticipating that the current wave will be brief.
While a result, we may see a temporary increase in unemployment claims as employees adjust to being out of work owing to quarantine and isolation regulations. However, this does not always indicate that firms are laying off employees in droves, as they did earlier in the epidemic.
On the contrary, many businesses are still eager to employ, to the point that they’re upping pay and introducing new incentives to entice people to join. Thus, the likelihood is that if jobless claims increase, the increase will continue only a few weeks before falling back down.
Is All Stimulus Aid Ruled Out?
Americans are unlikely to receive a direct stimulus payment anytime soon. However, there is a possibility that lawmakers may find a mechanism to distribute funds to families with children who qualify for the enhanced Child Tax Credit.
Last year, the credit’s value was significantly enhanced, and payments were delivered in monthly instalments to give households with a regular supply of backup income. President Biden planned to maintain the enhanced credit this year and included that goal in his Build Back Better agenda. However, the Senate is presently stuck on that budget package.
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At this point, lawmakers may be forced to break up the large spending plan in order to advance it. And, while there is widespread resistance to retaining the expanded Child Tax Credit in its current form, the expectation is that discussions will result in a boost for families in need in 2022.
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