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Saturday, August 6, 2022

Stimulus Checks A Likely Possibility In The Next Recession

Stimulus check payments have been quite popular among the Americans who recently faced the pandemic and are currently facing inflation. Although the National Bureau of Economic Research hasn’t yet declared a recession officially, some experts are of the opinion that an economic downturn of that proportion could very likely lead to another round of stimulus relief.

Tara Sinclair of the George Washington University, recently informed MoneyWise that the stimulus payments during such turbulent times were quite a common policy in the bygone days- and this would mostly be a response from the federal government in the event that a recession is declared. And yet, she thinks that this could verily pose a problem for the country- in fact, it could even exacerbate the existing problems that this nation battles with. 

Stimulus Check Payment Could Lead To Recession

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In her statement, she mentioned that if the economy were to receive more stimulus check payments, this wouldn’t really lead to more economic growth. On the other hand, it would simply get us more inflation. The comments made by Sinclair eerily reiterate the concerns that were raised by the Congressional Budget Office back in the September of 2020, when the nonpartisan federal agency went on to forecast that the COVID stimulus payments could have long-term effects like inflation.

In a report, the CBO also mentioned that the debt that was caused by these relief payments would definitely increase the chances of a fiscal crisis- thereby allowing for a possible scenario where the investors would be losing their confidence in the ability of the US Government to service and repay its debt. 

At that time, the federal government had welcomed the challenge. But as it turns out, they are now trying to control inflation, without leading to a recession. While the report from the last quarter’s GDP found that the economy had gone down, the NBER hasn’t made any official declaration of a recession call- leading to the possibility of a stimulus check payment.

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