Recession STIMULUS CHECKS? – Get Ready!
(NewsBroadcast.com) – Economic impact payments, otherwise known as stimulus checks, hit bank accounts not just in America but around the world as a result of the COVID-19 pandemic. With many businesses shuttered or downsized and no end in sight, governments began sending money to citizens to help get them through tough times. According to one economist, with a recession caused largely by the symptoms of the looming health crisis, the likelihood of another round of relief may be on the rise.
Stimulus Checks are Likely
According to economics professor Tara Sinclair from George Washington University, history is likely to repeat itself when it comes to stimulus checks. The federal government has met the last three recessions with the option, with varying results. The COVID stimulus payments may have helped a lot of struggling people, but there’s also a lot of speculation that the influx of money for families who didn’t need the help created a consumable buying frenzy, adding pressure to already strained supply lines and actually contributing to inflation.
Sinclair believes that would be the outcome again if the government hands another round of free cash. She told Moneywise that tossing cash at people sounds great as a lot of families are struggling, but there needs to be some sort of fiscal legislation in place to tip the scales back towards normal in case any such plan backfires.
“We’re going to learn a lot from this [situation] because we haven’t [experienced] this much inflation in the US in a long time,” the economist said. The current rate of inflation is just over nine percent.
Stimulus packages are a common response to harsh economic climates. Perhaps the most famous use of federal funds to boost American finances is the response to the Great Depression.
The First and Second New Deals provided the governmental infrastructure to regulate Wall Street while also spending an enormous amount of money on civic projects such as the Hoover Dam and the Golden Gate Bridge to provide quality, high-paying jobs and boost the economy. In addition, a slew of regulatory agencies was born, changing the investment landscape of the finance world and putting far more emphasis on blue-collar work. The Social Security system was also a direct result of these famous nation-building packages.
Legislation signed by both former President George Bush and former President Barack Obama helped deal with the Great Recession. Between an influx of cash, domestic investments, and laws protecting Main Street from Wall Street to boost consumer confidence, the economy slowly crept back to life.
Every situation is different, and most opinions have an opposing view. History and theoretical outcomes are all well and good, but it will be the American people who learn first-hand if another round of spending will hurt more than it helps.
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