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Will declining Inflation stops Stimulus Aid in 2023?

Stimulus Update: Will Slowing Inflation Take Stimulus Aid Off the Table for 2023?
Stimulus Update: Will Slowing Inflation Take Stimulus Aid Off the Table for 2023? (Photty by Getty)

Will the declining inflation stop the Stimulus aid in 2023? In 2022, inflation was a significant issue for consumers. The Consumer Price Index (CPI), which tracks changes in the cost of consumer goods, increased 9.1% on an annual basis in June of that year. Since then, the rate of inflation has been gradually slowing. And the CPI only registered a 6.5% increase in December 2022. Even while that reading is still high historically, it is far lower than 9.1%.

Stimulus Update: Will Slowing Inflation Take Stimulus Aid Off the Table for 2023?

Stimulus Update: Will Slowing Inflation Take Stimulus Aid Off the Table for 2023? (Photo by Getty)

It is now obvious that reducing inflation is a desirable thing. People are likely to start struggling less and accumulating less credit card debt if it costs less for them to function and pay for essential living expenses. But will declining inflation stop the stimulus aid?

It’s a common misperception that whether or not Americans receive stimulus payments in their bank accounts depends on inflation. Instead, stimulus funding is dependent on the health of the economy, specifically consumer spending and unemployment.

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With Congress gearing up for another trillion-dollar round of economic relief that will set the strategic direction of the U.S. economy for years to come, it’s time for corporate America to stand up and be clear about the economy it wants and needs to prosper.

Lawmakers can utilize stimulus cheques as a tool to inject money into the economy to boost it as needed when unemployment rates are high and consumer spending starts to fall. Generally, there is no need for stimulus checks since there is no reason for them to exist while unemployment is low and consumer spending is stable.

As a result, lowering inflation levels won’t necessarily rule out providing stimulus aid in 2023. However, let’s be clear: whether inflation is high or low has little to do with stimulus checks.

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Inflation pushed up costs across the board—food, beverages, and labor—in 2022, and that is likely to remain the pattern in 2023. Combined with continuing economic uncertainty and the need for new—or better—strategies to deal with the sector’s ongoing labor shortages, it will take tight management and smart investments for continuing viability in 2023.

Having said that, it is unquestionably excellent news for consumers that inflation is slowing down. For instance, based on inflation, a product that cost $40 in 2020 would have cost more than $45 in 2022. That’s a significant jump.

Since the year has only just begun and no recent inflation data has been released, it is too early to extrapolate comparable figures to 2023. For instance, the statistics for January won’t be released until February. In any case, a slowdown in inflation is a good thing. And anyone disappointed about not receiving a stimulus aid should understand that relief from skyrocketing living expenses can be much more beneficial than a one-time payment.

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Is stimulus aid for 2023 unquestionably, no?

No, not always. Recessions are always a possibility and nobody wants them. We can’t rule out the possibility of an economic downturn of note, as financial gurus have been warning of one for months.

In that situation, if the unemployment rate rises dramatically, a stimulus check may be necessary. But nobody should want that.

Having said that, declining inflation may be a hint that a recession can be avoided. The Federal Reserve may decide to tone down its aggressive interest rate increases if the rate of inflation stays low. That might prevent customers from being compelled to substantially cut their spending. Additionally, we can probably avert a slowdown in the economy provided expenditure remains stable.

In conclusion, lowering inflation is a beneficial thing, even if it doesn’t directly result in more money ending up in people’s bank accounts.

 

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