Vanessa LovegroveThe StoryThe economic recovery is real, but we're not out of the woods yet. Go on.America hoped for a quick return to normal in 2021. But turns out, bouncing back from a global health catastrophe isn't easy. New COVID-19 variants haven't helped. While the US continues getting back on its feet, here are some of the money issues that still need work. The cost of the cure: In January, President Joe Biden picked up where the Trump admin left off, propping up the economy with relief measures. Think: extra unemployment benefits, a pause on evictions and federal student loan bills, an expanded child tax credit, near-zero interest rates, and stimulus payments. Stimmies worked to keep many Americans out of poverty and fueled others' interest in investing manias (more on that later). But not everyone was included in the economic recovery. Plus, all that extra financial aid contributed to massive federal deficit levels and... Drama on the Hill: After dropping nearly $2 trillion on another pandemic relief package, some lawmakers were resistant to more government spending. Even to avoid a shutdown or hitting the debt ceiling — although both crises were averted. Twice. That threw a wrench in Biden’s plans to build up the nation’s infrastructure. His OG proposal included investing in health care, education, curbing climate change, and advancing racial equity...for the low, low price of $6 trillion. Republicans (and some Dems) said 'think again,' and Congress spent most of the year negotiating. The infrastructure bill Biden ultimately signed into law in November cost about $1 trillion. Much of the eliminated social investments (hi, paid leave) were meant to go into a second spending bill…that may be DOA (bye, paid leave?). Supply got low, low, low, low, low: TP was back on the shelves, but 2021 had plenty of its own shortages. Including ketchup packets, furniture foam, cars, smartphones, fuel, workers, and more. Why? Pandemic-era shutdowns put a halt to production and shipping, even as Americans continued clicking ‘add to cart.’ And supply-chain disruptions (including ransomware attacks) continued to ripple through this year. That all led to... Prices headed higher and higher: Along with shortages and stimmies, "revenge spending" (aka splurging to make up for lost time) fueled inflation. Making just about everything — from airfare and food to gas and cars — more expensive. Or just a little worse than it was before. The Federal Reserve says some inflation, around 2%, signals a healthy economy. But in November, the Consumer Price Index (which measures the average prices of groceries, housing, and other necessities) rose 6.8%, the biggest annual jump since 1982. Experts think inflation issues will continue well into 2022 (despite shoppers' "inflation denial"). To help, the Fed is planning a big policy shift — from focusing on measures that help boost the economy to ones that cool things off and curb rising prices. On the agenda: raise interest rates at least three times next year and speed up plans to “taper” its bond-buying program. theSkimmCOVID-19 relief efforts may be winding down. But the effects of the pandemic — and all that gov spending and support — will likely have a lasting ripple effect. Read: higher prices, slower economic growth, and maybe a new vocab word for 2022: “stagflation.” |
