Stimulus Update: The Fed’s Latest Rate Rise Fuel a Recession That Leads to Stimulus Check, Will They Do It?
Inflation has been fueling consumers a hard time since the latter part of 2021. Many people have been forced to charge up on their credit cards and empty their savings accounts just to keep up with rising costs, for over the past year and a half.
According to a published post by The Ascent, the Federal Reserve wants to see what the problem of this inflation is and how to make it go away. It’s been progressively hiking up interest rates this year to cause a withdrawal in consumer spending. To make it clear, the Fed doesn’t set consumer borrowing rates, like auto loan and mortgage rates.
The goal now is borrowing more expensive is to move in a modest decline in spending so that the supply of goods and services can finally catch up to the demand. Once that happens it should bring inflation down.
The Fed is taking a huge risk. If consumer spending declines drastically, it could be enough to stimulate a full-blown recession. Back in November, the Consumer Price Index, which measured changes in the cost of consumer goods, showed a deceleration in inflation compared to earlier this year. On top of that, the Fed announced that on Dec. 14. roughly 0.50% interest rate will rise and that won’t lead to an instant recession, it will bring us closer.
Stimulus Update: Will the Fed’s Latest Rate Hike Fuel a Recession That Leads to Stimulus Check? (Photo: The Ascent)
Stimulus Update: Will the Fed’s Latest Rate Hike Fuel a Recession That Leads to Stimulus Check?
Things might take a big turn for the worse but so far, higher borrowing costs didn’t seem to be slowing consumers down, but some experts think the actual reason we haven’t seen a notable decline in spending is that Americans still have leftover stimulus funds to spend from 2020 and 2021 spending could drop to a large degree.
Lawmakers have formerly relied on stimulus aid to break the economy from the slump. If things get worse for the economy in 2023, Americans might see another round of stimulus checks land in their bank accounts.
If a recession in 2023 strikes, stimulus checks will be back on the table. There might be a lot more limited in size and extent than in the previous years. Everything was said and that stimulus aid is not something that a typical consumer should rely on even if economic conditions decline.
READ ALSO: $600 Money Americans Could Lose Per Year Because Of COLA In 2023
