Consumers have been suffering from inflation since the latter half of 2021. In addition, many people have had to use their credit cards recklessly and withdraw money from their savings accounts to keep up with escalating expenditures during the past 1.5 years. The Fed Reserve is motivated to solve the inflation issue. And to achieve that, it has aggressively increased interest rates the current year in an attempt to reduce consumer spending.
In contrast, the Consumer Price Index for November revealed a reduction in inflation as compared to earlier in the year. This index tracks changes in the cost of consumer goods. Despite this, the Fed raised interest rates by 0.50% on December 14. That won’t cause a recession right away, it might bring us together.
The Situation Can Deteriorate
Higher borrowing rates don’t appear to be significantly slowing down consumers as of yet. However, other analysts believe that the fact that American citizens still have stimulus monies left over from 2020 and 2021 is a significant factor in why we haven’t seen a discernible fall in spending. Spending may drastically decline once that money is gone. If that occurs, it might be sufficient to trigger a recession in 2023. Then, perhaps, the subject of stimulus help will come up again. In the past, lawmakers have turned to stimulus funding to lift the economy out of a recession. Therefore, if the economy continues to struggle in 2023, Americans may receive additional stimulus payments into their bank accounts.
Legislators Might Be Frugal
Even though a recession in 2023 would trigger another round of stimulus assistance, the most recent package of help received harsh criticism. A lot of specialists think that the hefty stimulus measures adopted by lawmakers in 2020 & 2021 are what first caused inflation to become so out of control. The possibility of receiving stimulus funds again exists if a recession occurs in 2023. However, they might be far smaller and more focused than in recent years reports Fool.
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