The US government and the Federal Reserve have come together to launch a stimulus program during the COVID-19 but there is a time limit on the program and it is set to end by March 2022.
Don’t Expect Congress to Pass a Long Term Stimulus Check
Even while some states continue to provide stimulus checks to their inhabitants, the US government’s stimulus program has come to its limit. The Federal Reserve will now follow suit, reducing its bond-buying stimulus program earlier than predicted.
While some progressive activists are asking for a second check, neither the Democratic nor Republican leaderships are in support of another direct payment, according to a report from the House a few months ago. President Biden is in the same boat: early this year, White House Press Secretary Jen Psaki told reporters that a fourth check was not on the administration’s to-do list and that the checks “weren’t free.” Stimulus checks aren’t inexpensive, and she’s right. The federal government spent about $400 billion on the previous batch of $1,400 checks.
Second, the economy is doing much better these days. The economy has gained several numbers of 17.4 million jobs since May 2020. The 4.8 percent unemployment rate in September is somewhat lower than the 5% threshold formerly considered “full employment” by economists. And it’s a far way from the 14.8 percent figure in April 2020.
Furthermore, growing inflation is the root reason for this policy change. Despite its preference for gradual changes, the Federal Reserve is removing stimulus quickly owing to fears that inflation may get stuck at a high rate. This implies the Federal Reserve’s stimulus program will be fully phased off by March 2020.
What does Will happen to the US Economy in 2022?
While a repeat of what occurred in 2020 is improbable, COVID-19 is unpredictable and presents a severe economic threat to the United States. It will be crucial to avoid more lockdowns, as well as to keep inflation under control and eliminate supply-chain bottlenecks.