I’m an Economist: Why Stimulus Checks Don’t Really Help Americans
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
As the U.S. faces a new presidential administration in 2025 with President-elect Donald Trump returning to the White House, many Americans may be hoping that with it will also bring new stimulus checks.
While people may associate Trump’s first term in office with having received two rounds of stimulus, one in March 2020 for around $1,200 and one for $600 in December 2020, those funds were related to the fallout of the COVID-19 pandemic, and thus not likely to be reissued.
Additionally, though high inflation of the past few years has put a strain on many Americans’ finances, the economy holds steady in terms of employment and overall stability. Some of Trump’s proposed policies, such as tariffs on U.S. goods imported from China, Mexico and Canada, however, could potentially send inflation spiking again.
Trump has promised to ease Americans’ financial burdens through things like tax cuts, though, so another stimulus is not out of the realm of possibility.
While a little extra money in one’s wallet is always welcome, do stimulus checks actually help Americans in the long run?
Michael Collins, an economics professor, chartered financial analyst (CFA) and founder and CEO of WinCap Financial, explained that it’s not as straightforward as that.
Not a Full Solution
Collins looks at stimulus checks through a financial planning perspective as well as an economic one. While stimulus checks provide immediate relief to many households, helping them manage urgent expenses and alleviate short-term financial stress, “they aren’t a full solution to economic crisis,” he said.
They’re Meant To Boost Consumer Spending
The irony of a stimulus check is that it’s not intended to help any individual or family save money. On the contrary, Collins pointed out, “Stimulus checks are designed to boost consumer spending and support economic activity during downturns.” They work as intended only when they’re spent.
Economy or Bank Account: Which Is Really Stimulated?
The efficacy of stimulus checks can vary greatly depending on how recipients choose to use them, Collins said. For example, “when individuals use these funds to pay off debt or simply save their checks in their savings or investments, the immediate stimulative impact on the economy might be less pronounced than if the funds were largely spent.”
Stimulus checks, by their nature, can’t be given with “certain terms,” Collins said. Thus, nothing stops those who don’t need the extra money from not putting it back into the economy.
“By doing so, the whole purpose of the stimulus is flipped upside down and exacerbates the problem of economic challenges,” he said.
Difficulty Determining Need
Another challenge of stimulus checks is that it can be next to impossible to give them out to those “who need them,” Collins said. Identifying those who actually need them from those who don’t is not easily done on a massive scale, he explained, and “is one of the reasons we saw wide nets cast for those who were eligible for stimulus checks during the pandemic.”
Not a Long-Term Solution
While stimulus checks can provide temporary financial relief, they don’t address long-term issues such as job creation and wage stagnation, Collins said. Those broader challenges require comprehensive policy approaches, including investments in education, infrastructure and workforce development.
“Stimulus checks can often be a short-term tool that are a step in the direction towards much larger long-term economic challenges,” he said.
Ultimately, while stimulus checks are a useful tool in a moment of crisis, they are part of a larger puzzle in achieving economic stability and prosperity, Collins said. “Effective financial management and policy-making require a balanced approach that goes beyond temporary support measures.”
More From GOBankingRates
