The "safety net" abruptly comes to an end, cutting off the "lifeline" of American families. American media: Millions of families' lives will become more expensive and temporary | Family | America

China Daily, July 18th (Xinhua) - Several temporary "safety net plans" implemented by the United States over the past three years will come to an end this autumn, which will bring significant economic pressure to millions of families, according to foreign media reports. Many Americans will soon face high bills for student loans, childcare, healthcare, and food, deepening the impact of years of inflation.

Screenshot of Axios report on the US digital news website

According to Axios, a digital news website in the United States, millions of families will face a difficult situation, including student loans expiring again in October this year, the first time in more than three years. The funds provided for children's health care during the COVID-19 epidemic also expired almost at the same time. According to the estimation of the Century Foundation, more than 3 million children will lose the opportunity to receive care, and 70000 children's care projects will be closed. Another survey found that approximately 40% of child care institutions hope to increase tuition fees after the funding program ends. In addition, the work requirements for food vouchers will also come into effect again this autumn.

A White House official said: "The real problem here is that these policies are undoubtedly the lifeline of families in the COVID-19 pandemic and economic recovery. Although the original intention of these policies has always been temporary, with their withdrawal, there is a huge risk of interruption."

According to estimates from the Center for Budget and Policy Priorities in the United States, this could result in at least 500000 people losing food aid, while the recently reached debt ceiling agreement will expand job requirements to more beneficiaries, putting an additional 750000 people at risk. The states will continue to cut their Medicaid list, eliminating those who were registered during the COVID-19 pandemic but no longer qualified. Most states began this process this summer.

According to data from the Caesar Family Foundation, it is estimated that over 2 million people have been deregistered, of which 75% may have low incomes and should still meet the criteria, but have been disqualified due to incomplete documentation. "We are stopping all these very important forms of aid at the same time, which has raised many concerns that some families will be affected in multiple ways. All of these additional costs are occurring simultaneously, especially in the context of ongoing inflation," said Krista Ruffini, assistant professor at Georgetown University's McCourt School of Public Policy

According to a survey conducted by Life and My Finance, half of student borrowers reported that their income would not be sufficient to repay the loan when the three-year suspension of student loans resumed in October. The article points out that all these measures are temporary in nature. Some economists suggest that these measures have already had an inflationary effect, and canceling them may actually be beneficial for the entire economy.

"The United States is in a strange situation, which will bring some difficulties to those who are losing their benefits. At the same time, from a macroeconomic perspective, the US government wants to slow down growth to some extent to bring inflation back to the Federal Reserve's goals," said Michael Strand, Director of Economic Policy Research at the American Enterprise Research Institute

Multiple factors combined, the US economy is facing a recession crisis. As Americans seek loans to make a living, they may face even more difficulties in obtaining loans. According to a report by USA Today, a survey conducted by the Federal Reserve on the 17th showed that the rejection rate of credit applicants in the United States jumped from 17.3% in February to 21.8%, reaching the highest level in five years. The report highlights that financial institutions are adopting a cautious attitude during one of the most aggressive interest rate hike cycles in the history of the Federal Reserve and a potential recession.

Among them, the rejection rate of US car loans increased from 9.1% in February to 14.2%, reaching the highest level since the data was first collected in 2013, and exceeding the application rate for the first time. Alex Liger, CEO of Tenet, which provides financing for electric vehicles, said, "This is the risk avoidance model for banks.". He refers to the trend of banks cutting or completely withdrawing from car loans in the past year. "American consumers were already under pressure, but now it's even worse because banks are reducing loans."

Screenshot of a report by Barron Weekly in the United States

According to a report by Barron Weekly on the 17th, economists, federal officials, and markets may feel that the United States is in the final stage of fighting against soaring prices, but most Americans do not feel much ease in their wallets. A nationwide survey of 2042 American adults conducted by Harris Poll showed that 85% of Americans still worry about inflation and the overall economy. The Consumer Food Insights report released by Purdue University also showed that the food insecurity rate in the United States rose to 17% in June, which is consistent with the highest record in March 2022.

Goldman Sachs economist Jane Hazos wrote, "Our US economy will slow down in the coming quarters, mainly due to a continuous slowdown in real disposable personal income growth - especially in October when student debt repayment resumed - and a decrease in bank loans."

The Federal Reserve has raised interest rates significantly in the past year, approving rate hikes 10 times in a row in hopes of curbing inflation, which is also the fastest pace of tightening since the 1980s. The report indicates that, with signs of potential inflationary pressure, it is expected that the 11th rate hike will be approved by the Federal Open Market Committee at the end of its two-day session next week. To alleviate the pressure of inflation on American budgets, the Federal Reserve still has more work to do