The checks are inflationary because they raise the price of goods and services in the economy. The money that is transferred to consumers through stimulus payments goes directly into the hands of businesses and workers, who then spend it on goods and services, driving up prices.
Governors have said they will use their checks to pay down debt or save for a rainy day, but no one should be surprised if some recipients find themselves spending the money on things they don’t need. That’s just human nature!
Consumers tend to overspend when given cash—and this isn’t necessarily good for an economy in long term either: If people spend unwisely now and rack up credit card debt that can’t be paid back later on, they may end up hurting themselves financially while also making it more difficult for private companies to hire new employees or invest in new projects (because these companies won’t have enough cash).
Stimulus Check: State Provides Respite
In short, the evidence we have suggests that stimulus checks are not inflationary. They’re not particularly large, nor are they permanent. While they may increase spending in the short term, there’s no reason to expect that this spending will lead to higher prices or wages overall.
While it’s not guaranteed, if the final package passes, you could still get a second stimulus check before 2022. The size of this second check will depend on what happens with the final package and when it passes. If you do receive another stimulus check, it might be bigger than your first one and paid out in 2021.
You can claim your stimulus check as a credit on your 2021 tax return if you didn’t receive it, but only if you were eligible to receive it in 2020. If you don’t file a tax return for 2020 or 2021, you won’t be able to claim the stimulus check as a credit.
If it turns out that you’re eligible for more than one stimulus check—for example, because of an amended return—you can only take advantage of one per year. It doesn’t matter which payment arrives first; once they arrive at all, they’re considered part of the same year’s income and can’t both be claimed at once.