The Covid-19 pandemic is approaching its two-year anniversary and The United States has just crossed another grim milestone that exceeded 900,000 deaths. Despite continued disruptions in business as usual and covid-19 that keep people from working, no new covid-related relief is on the table.
Several factors are at stake that prevent action to help U.S. households still struggling in the wake of the recession caused by the virus. Even after the nation experienced its largest increase to date in the pandemic. Here you can see why.
Congress has in the past acted swiftly to provide emergency assistance to Americans affected by the pandemic
When the United States and the world were put on lockdown, millions of workers were confined to their homes that sent unemployment has risen to 14.7 percent in April 2020. Congress acted swiftly to pass the 2020 CARES Act to get emergency assistance to businesses and households, among others. the first round of stimulus checks of up to $ 1,200 for qualified adults and $ 500 per qualified child under 17 years of age.
Congress also passed generous increased pandemic unemployment benefits, which kept households afloat where workers’ businesses were closed or they had to stay home due to pandemic-induced upheavals in their lives. These benefits were extended in 2020 and again in 2021, but have now ceased, is seen by some as the cause of a severe labor shortage in the United States.
Two more rounds of stimulus checks was also adopted in the meantime of up to $ 2,000 in total. They are credited for overloading the economic recovery which had begun to limp in late 2020, when a new variant caused the infections to increase. But the latter has also been blamed for the current high inflation.
Unemployment is expected to fall to 3%
The US economy has started, recover much faster than after the Great Recession. With covid-19 vaccine shots in their arms, Americans again began to venture out to increase demand and hire. This led to the most jobs achieved in a year, with the United States adding 6.4 million in 2021.
However, the current unemployment rate of 4 percent is still above the pre-pandemic level as it was 3.7 percent. And for all the jobs that were added, there is still an almost equal number of unemployed Americans. St. Louis Fed President Jim Bullard, however, predicts that it could fall to below 3 percent by 2022a level that could mean the economy overheats.
The Omicron variant did not slow down job progress
Unlike last year, when the Omicron variant pushed new infections to levels much higher than at any point during the pandemic, the United States recorded significant job growth. Data collected in the middle of the wave reported 467,000 new hires, more than three times what analysts had expected. In addition, there are more vacancies than there are vacancies to take them push up wages while companies try to attract employees.
On the other hand, 6 million people, almost twice as many as in December, could not work or lost hours compared to the previous month due to the pandemic that disrupts normal business at their place of employment. The incredibly rapid increase in infections from the highly contagious Omicron variant fortunately seems to have turned around just as quickly.
Stimulus blamed for high inflation
The last round of $ 1,400 direct payments, which started in March 2021 along with the huge amounts of covid-19 relief supplies that have been added to the US economy, have been the blame for the higher than normal inflation plagues the nation. The Federal Reserve Bank of San Francisco looked at the effect of the U.S. bailout plan specifically on inflation.
It turned out that Biden’s stimulus is temporarily increase inflationbut does not cause “overheating”, as has been suggested. Their analysis found that “ARP is expected to cause inflation to rise by around 0.3 percentage points in 2021 and by a little more than 0.2 percentage points in 2022. The effect in 2023 is negligible. ”
Other factors help push prices up almost everything, a major source has been supply chain disruptions caused by the pandemic. This prompted manufacturers to struggle to secure scarce supplies of input to manufacture their products. Americans, in turn, have pushed up consumer goods up with excess savings they acquired during the lockdown increasing demand for limited supplies.
The goal is to bring inflation under control
During 2021 many economists and policy makers in the Federal Reserve believed that higher than normal inflation would be temporary. However, as inflation level continued to rise to new heights by the end of the year, the consensus changed, and the central bank decided to be more hawkish.
In January, the Fed announced that it would begin to slow down its stimulus programs, which have poured huge amounts of liquidity into the U.S. economy. It has also helped the stock market reach ever-greater heights.
In addition, the central banks will start raising interest ratesexpected to begin in March, which has been at almost zero during the pandemic. The Fed will have a difficult balancing act to accelerate fiscal tightening without anchoring inflation by going too slow or causing a recession if it goes too fast.
Although another stimulus check could help people with the rising cost of living, the fear of driving inflation even higher by injecting even more money into the economy has silenced legislators’ calls to do so.