Stimulus Update: Economic Conditions Could Deteriorate, but Right Now, They Don't Justify Another Check
- Today's job market is very robust.
- Despite warnings about a potential recession, it's too soon to justify a fourth stimulus round.
Many Americans really want a stimulus check. But the state of the economy doesn't support one.
It's no secret that many Americans are struggling financially right now. Not only has inflation caused living costs to soar, but the Ukraine crisis has driven gas prices upward. Since many people don't have savings to tap -- either because they depleted their cash reserves during the pandemic or never had money in the bank to begin with -- a lot of households are truly unable to make ends meet.
In fact, many struggling Americans are hoping that lawmakers will somehow authorize a fourth stimulus check. But for that to happen, the U.S. economy would need to take a serious turn for the worse -- namely, reach recession territory. Right now, that's not where we're at -- even though recession warnings are already flashing.
Are we headed for an economic downturn?
Right now, the U.S. economy is in a good place, despite inflation. In fact, it's easy to argue that inflation is a sign of a healthy economy, despite the blow it tends to deal to cash-strapped consumers.
Often, the cost of living will increase when the demand for goods exceeds supply. And if demand is strong, it indicates that people have money to spend.
Meanwhile, the U.S. labor market is nice and strong. In February, there were 11.27 million job openings -- about 5 million more than the number of unemployed workers. The last time stimulus checks went out, jobs were much more difficult to come by.
But recently, the bond market sent a warning that, in the past, has been indicative of a recession -- an inverted yield curve for U.S. Treasury bonds. Normally, longer-term bonds come with a higher rate of return than shorter-term bonds. The reason? Longer-term investors take on more risk.
Earlier this week, the yield curve briefly inverted, which means that the yield on the 10-year Treasury bond dipped below the yield of the two-year Treasury bond. And while that inversion was temporary, we'll need to see if it happens again.
To be clear, there's no need to sound an alarm about a pending recession. At the same time, though, economic conditions are in no way dire enough to support a fourth stimulus round right now. And that's something Americans will need to accept.
Making ends meet when costs are high
Unfortunately, cash-strapped households today may need to resort to finding extra work on top of their regular jobs to compensate for higher living costs. The good news is that the gig economy is loaded with opportunities in that regard. And so those who are able to make that effort might manage to grow their earnings enough to keep up with the expenses their regular paychecks can't cover.
Of course, if things take a notable turn for the worse, then we could see lawmakers start to discuss a fourth stimulus round. As it is, some lawmakers are pushing for a gas-specific stimulus that's payable during periods when fuel costs are extremely high, as is the case today. But so far, that gas stimulus is just an idea -- and it's a windfall nobody should be banking on just yet.
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