States’ efforts to provide inflation relief to US consumers with tax rebates may go over well with recipients — yet they risk adding even more fuel to spending and making it tougher for Federal Reserve policy makers to cool inflation.
Even so, the impact is likely to be limited on both spending and prices, economists said. That’s in part because only a small number of states have adopted such plans and the packages often are targeted at individuals in lower-income brackets.
California officials over the weekend announced a relief package that will give $9.5 billion of tax rebates to residents. The checks of $200 to $1,050 are likely to go out in October to about 17 million families. States including Colorado, Maine, Indiana and Delaware are implementing similar measures to help people cope with high prices, particularly for necessities like gas and food.
