Since 2021, customers have been suffering from inflation. And even though the situation now appears to be better than it did in the middle of 2022, the inflation estimate for January included some less-than-pleasant surprises.
It is understandable why customers might link high inflation rates to stimulus funding. The high expense of living makes people more likely to struggle. And aid payments may make it easier for each American to manage the rising cost of living.
Consumer Price Index
The Consumer Price Index, which tracks changes in the price of products and services for consumers, increased by 0.5% from December to January. That represents a sizable increase in just one month.
Additionally, it explains why so many consumers struggle monetarily and rack up credit card debt. But traditionally, inflation has not been targeted with stimulus checks.
Instead, stimulus checks have typically been used during times of high unemployment and declining consumer expenditure. We are not currently in that circumstance.
Stimulus Check
Not only is inflation not typically a factor in stimulus checks, but it is also probable that sending funds into Americans’ bank accounts at this time will only exacerbate the inflation issue.
The fact that consumer demand has consistently outpaced the supply of goods and services accessible for months is what has led to us being caught in this inflationary trap.
Consumer spending needs to go down for inflation numbers to go down. However, if the federal government continues to give Americans generous paychecks, they won’t be inspired to reduce their spending. If anything, they would presumably spend money rather than save it, adding to the inflation issue and making it worse.
The economy will likely deteriorate as the year progresses, and unemployment rates will rise. Inflation should eventually start to decline, particularly as the Federal Reserve continues to raise interest rates, which is likely to happen in 2023.
But even though they might seem like a good idea, stimulus payments aren’t the answer to the current problem of skyrocketing inflation. A gig economy is a superior option for people trying to increase their income and tighten their spending, reports The Motley Fool.
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