Stimulus Update: Strong Job Growth Makes Stimulus Checks Less Likely in 2022
- In February, the U.S. economy added 678,000 jobs.
- The national unemployment rate fell to 3.8%, marking its lowest level since the start of the pandemic.
Job growth soared in February. That's a good thing for the economy but a bad thing for stimulus checks.
These days, many consumers are buckling under the weight of inflation. With the cost of everything from gas to groceries to apparel rising, Americans are having a harder time than usual making ends meet.
In fact, some people are still holding out hope that another stimulus check will hit their bank accounts at some point in 2022. But based on current economic conditions, that's unlikely to happen.
Job growth is on the rise
In February, the U.S. economy added 678,000 non-farm jobs, which greatly surpassed analysts' expectations of 440,000 new positions. Furthermore, last month, the national unemployment rate fell to 3.8%. That's the lowest the jobless rate has been since the beginning of the pandemic.
Because the economy is doing so well right now and the labor market is filled with jobs, it's difficult to make the case for a fourth stimulus check -- even though inflation is causing many Americans to struggle. In fact, oddly enough, inflation is actually a sign of a healthy economy.
A big reason the cost of goods is up right now is that there's more demand for products than there is supply. And that demand wouldn't be there if it weren't for the fact that more consumers have money to spend.
We're seeing similar trends in the home buying and rental market. Home prices are up on a national level because there are more prospective buyers than there is available inventory. Similarly, the demand for rentals has exploded over the past year, putting landlords in a position where they can charge tenants a premium.
A clear disconnect
Our current economic situation is an unquestionably tricky one. On one hand, job growth is strong. On the other hand, wage growth isn't keeping pace with inflation, so many consumers feel like they're falling behind (and to be clear, many are doing just that).
While it's easy to point to current conditions as a reason to send out more stimulus funds, the reality is that it's hard to make that justification. But that doesn't mean lawmakers are giving up on dishing out aid.
In his recent State of the Union address, President Biden pledged to keep pushing to extend the boosted Child Tax Credit, which helped pull millions of children out of poverty last year. In the absence of an extension this year, the credit will max out at $2,000 per eligible child. That's a considerable dip from 2021, when it maxed out at $3,000 per child between ages 6 and 17 and $3,600 for children under 6.
Biden also spoke about raising the federal minimum wage, which has held steady at $7.25 an hour for over a decade. And he wants to introduce programs that could ease the burden of childcare costs for working parents.
All of these measures clearly aren't the same thing as blasting out another round of stimulus checks. But they could achieve a similar purpose: helping struggling Americans shore up their finances and better manage their bills at a time when everything is so much more expensive.
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