WASHINGTON (TND) — States across the country have sent checks or given tax rebates to people in an effort to provide relief from inflation that is running near four-decade highs.
About 20 states have offered some form of relief benefit this year as prices for food, electricity and other essentials has skyrocketed since the world reemerged from pandemic-induced lockdowns that brought the economy to a screeching halt before roaring back to life with vast federal stimulus.
Many states have flush coffers and budget surpluses thanks to vast federal COVID-19 relief funding and increased tax revenue as economies rebounded from the pandemic. In some places, like Hawaii, Massachusetts and Colorado, state law requires lawmakers to return the excess money to taxpayers.
High inflation and gas prices throughout the year have also prompted multiple state legislatures to offer tax holidays and other tax cuts as a form of relief.
State-level stimulus is typically much smaller than the checks sent out by the federal government during the pandemic. Experts expect smaller checks and more limited eligibility to receive one will likely blunt the inflationary effects of giving out cash in a time where inflation is still high.
During the pandemic lockdowns, people received stimulus checks from the federal government but were unable to spend them as many businesses were closed and events like concerts weren’t happening, which led to an increase in savings.
“What people tend to do with the checks is they don’t spend which would increase inflation, they tend to save them which has no effect,” said Ryan Young, a senior fellow at the Competitive Enterprise Institute.
The latest rounds of stimulus checks may offer little financial relief for families being pinched by inflation, but they could offer some peace of mind, especially if the money is put toward savings with an economy that could teeter into a recession next year.
“That’s not nothing, if a family needs help that that will help cover the rent or something. But it’s not going to actually tamper down inflation or reduce price increases,” Young said.
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