Economists at Goldman Sachs have said consumers and businesses need to be prepared to face the worst, but the Fed still has little chance of recovering.
Senior President Lloyd Blankfein warned on Sunday that there is an extremely high risk factor for a recession and that everyone should prepare for difficult times. He added that the Fed had a narrow path to using the powerful tools at its disposal, and it responded quite well.
Blankfein said the Fed had no choice but to raise interest rates and curb consumer demand. And the resulting price increase will be quite oppressive and difficult for families in the lower income category.
In this depressing scenario, the prospect of another federal stimulus check seems unlikely given its potential to push inflation further.
Republican states like Florida pay stimulus checks from federal relief funds while blaming President Biden for inflation
But more states have moved in to bring emergency aid to their residents in the form of state stimulus checks. They target societies most affected by inflation, the highest in 4 decades, and the resulting rise in the prices of essential commodities and gasoline.
While some states have considered stimulus checks aimed at directly addressing gasoline prices and rising prices, other states, including Connecticut, have gone for a $ 250 tax deduction after getting the green signal from the state legislature.
The overheated labor market has led to a significant increase in the risk of recession. Most states are inundated with funds after a rapid economic recovery in 2021 and a supply of $ 350 billion in stimulus check funds from the federal administration. This infusion was awarded to cities and states as part of the U.S. Rescue Plan Act signed by President Biden in March 2021.
Most states currently go for tax breaks instead of direct stimulus control. Florida Gov. Ron DeSantis was the latest to join the wagon with a $ 1.2 billion tax cut. $ 8.8 billion, mainly due to the federal pandemic. But the Republican governor blamed the federal administration for the inflation he owed on the stimulus check and the subsequent stimulus check for child tax deductions.