Stimulus Update: As States Take on Stimulus Aid, Differences in Approach Emerge

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  • Federal stimulus aid is off the table for the time being.
  • Many states are sending out aid of their own, but their approaches are differing in a very big way.

State lawmakers are taking stimulus matters into their own hands -- and some are doing things very differently than others.

At this point, it's pretty clear that a round of federal stimulus checks won't be hitting Americans' bank accounts anytime soon. Not only is the labor market so strong that it negates the need for stimulus aid, but many economic experts insist that part of the reason we're dealing with rampant inflation is that the federal government blasted out stimulus funds to the public at a time when supply chains were battered. That caused a huge mismatch between supply and demand, thereby driving the cost of consumer goods upward.

At this point, many common items are still in short supply (think cars), and it's clear that a round of federal stimulus aid might worsen the problem of inflation rather than help it. But that doesn't mean states aren't invested in helping residents get through these trying economic times.

A number of states are sending out their own stimulus checks to residents to help them cope with the impact of inflation. But that means that individual lawmakers are tasked with dictating stimulus policies. And that's already leading to a world of disparity in the approaches different states are taking.

Different ways of dishing out aid

California residents are gearing up for a generous payday thanks to the state's massive effort to give stimulus aid out to the public. In fact, some California households could be in line for a payday worth up to $1,050. And all told, a good 23 million people in California may be eligible for stimulus aid.

But is that a good thing? Or is California being too liberal with its stimulus policies?

Florida lawmakers might think so. Like California, Florida is taking stimulus matters into its own hands. The difference? The Sunshine State is only offering up targeted aid that's expected to hit 59,000 households. That's a far cry from the millions California's stimulus program is expected to help.

So which approach is the correct one? It's hard to say. Ultimately, both are justifiable. Florida wants to reserve its stimulus funds for those who need that money the most, while California has been promoting its stimulus program as a rebate for the middle class, who are no doubt feeling the effects of inflation.

But regardless of the approach states take to giving out stimulus aid, it's important to acknowledge the risks of doing so -- namely, worsening the problem of inflation the same way another federal stimulus round might lead to an even more prolonged period of sky-high living costs. The reality is that any time consumers are given extra money to spend in short order, there's the risk of flooding the market and creating an imbalance between supply and demand. And since many supply chains still aren't up to speed, that risk exists even more so today.

Should states put an end to stimulus policies?

Not necessarily. Many households are struggling to cover their bills in the absence of government aid, and to not help them out when there's a surplus of funds available seems needless and, frankly, cruel. But let's just hope that no matter what approach states take to distributing aid, that it doesn't exacerbate the existing problem and prolong the cycle of rampant inflation.

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