With the global economy continuing to grow, albeit at a slower pace than before, there are some interesting developments in the world of stimulus as summer begins in 2022.
The biggest news is that the U.S., China and Japan all passed new stimulus packages in the first half of the year. These come after several other countries started to pass stimulus measures last winter, when it began to become clearer that the global recession would be more prolonged than previously expected.
While further details of these new programs haven’t yet been released, here’s what we know so far…
The Basics of Stimulus
First, let’s review the concept of stimulus and why it’s necessary. When the economy slumps, it’s normal for companies to produce less and hire fewer workers, because there is less demand for the goods and services they produce.
This is what happened during the Great Recession – millions of workers lost their jobs as businesses cut back their operations.
This led to a dramatic increase in unemployment, which in turn led fewer people to spend money. This reduction in spending led to lower sales for companies, which then led to more layoffs, which led to less spending, and so on.
The vicious cycle had a very negative impact on the global economy, and is the primary reason why it took so long for the economies in most countries to recover from the recession.
What are the latest stimulus measures?
The latest stimulus measures are mostly focused on the government sector, with sizable government investment in infrastructure being the most common theme.
The U.S. government announced plans to spend $100 billion on transportation projects in 2022. Other countries have announced similar plans, including Brazil ($50 billion), China ($150 billion), and New Zealand ($10 billion).
There are also a number of stimulus programs focused on the private sector, such as tax cuts, rebates, and investment incentives.
These efforts are being undertaken in an attempt to increase consumer and business spending, which will help the global economy get back on track as quickly as possible.
It’s important to note that these latest stimulus measures are being undertaken in addition to existing stimulus programs. For instance, the U.S. government has been working on a $2 trillion infrastructure program since the Great Recession ended.
The U.S. stimulus plan
The U.S. government announced its latest stimulus plan in the spring of 2022, when it also unveiled plans for a one-time tax rebate.
The tax rebate will be worth $6,000 per person, and will be paid to everyone who files a tax return in 2022. The rebate will be paid in addition to any other tax refunds that people are entitled to receive.
The U.S. government will finance the rebate by issuing special bonds, which will be repaid with interest over the next decade.
The government’s hope is that the rebate will put more money in people’s pockets, enabling them to spend more, which will help the U.S. economy get back on track.
The government is also planning to spend $100 billion on a wide variety of infrastructure projects, including road and bridge repairs, improvements to rail and port facilities, and upgrades to telecommunications networks.
Other Developments in the World of Stimulus
The economies in other countries are also continuing to develop new stimulus programs. For example, the Chinese government is working on a new $150 billion infrastructure program.
The Chinese government also plans to provide tax rebates worth $1,000 per person, and to cancel all taxes on imported goods.
The Chinese government hopes these measures will provide a much-needed boost to its economy, which has been lagging behind other countries’ economies in recent years.
There’s also been talk in Japan of the government increasing spending on infrastructure, although it’s unclear if such a stimulus program will be implemented this summer.
There’s one more interesting development in the world of stimulus. For the first time since the Great Recession, central banks in a number of countries are starting to consider ending their stimulus programs.
There are still a few countries that have yet to start stimulus programs, but most central banks are now starting to discuss the possibility of ending their current programs.
U.S. Tax Rebate and Infrastructure Program
The most interesting development in the world of stimulus this summer, however, concerns the U.S. government’s decision to cancel the tax rebates that people were entitled to receive under the Tax Cut and Jobs Act of 2021.
These rebates, which were worth $3,000 per person, were due to be paid out in the fall of 2022. The government decided to give the rebates early, in the form of a one-time tax rebate worth $6,000 per person.
This is being done as an attempt to give people an immediate boost in spending, since the tax rebates will be paid out in the summer of 2022.
The government also announced that it plans to spend $100 billion on a variety of infrastructure projects. This is being done in hopes of jump-starting the economy, and getting it back on track as quickly as possible.
Conclusion
The summer of 2022 will be an interesting one for the world of stimulus, as governments around the world work to get their economies back on track as quickly as possible.
There are several big developments underway in the world of stimulus, with the most significant being the U.S. government’s decision to cancel the tax rebates that people were entitled to receive in 2022.
These rebates will be paid out one-time as a $6,000 tax rebate in the summer of 2022, and will be used as an immediate boost in spending.
Other countries are also continuing to develop new stimulus programs, with a focus on infrastructure investment. All in all, it looks like the global economy will begin to recover from its slumping state in the summer of 2022, as the latest stimulus measures take effect.
