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Friday, July 1, 2022

Another Round Of Stimulus Checks Can Help With Inflation

Massive stimulus check packages passed by Congress in 2020 and 2021 helped keep the United States out of a deep recession, or perhaps even a depression. However, the influx of capital to businesses and individuals also helped prop up the inflation rate.

After a booming recovery in 2021 as America emerged from the lockdowns of the pandemic, the economy in 2022 is at a crossroads.

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The dilemma policymakers now face is whether putting additional money in the pockets of Americans will drive inflation even higher or if it will allow them to better cope with rising costs. Here are the opinions of some experts on the issue, along with a look at the smaller stimulus check payments that are either being discussed or already have been approved at the state level.

Can Stimulus Checks Drive Inflation?

Although the amount can be debated, there is no doubt that the $5 trillion released into the American economy during the pandemic had at least some effect on rising inflation. According to the Federal Reserve Bank of San Francisco, stimulus payments had a quantifiable effect of adding about 3% to the U.S. inflation rate by the end of 2021, and prices have only climbed higher since then.

Bank balances in the U.S. soared as stimulus payments were being distributed, and they still remain higher than their pre-pandemic levels, according to both the JPMorgan Chase Institute and the Washington Post. This potentially suggests that any additional stimulus payments won’t go to basic needs as much as discretionary purchases, which may drive prices higher still.

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