Stimulus Update: Final Checks Are Going Out Soon — Will There Ever Be More? 7 Experts Weigh In
What could be the last round of state-issued stimulus payments have been sent out, with New Jersey, New Mexico, Pennsylvania, South Carolina and Virginia all participating to varying degrees. The burning question now is: Will there ever be more stimulus checks issued?
GOBankingRates reached out to seven finance experts to learn what they think. Spoiler alert: No one is optimistic about it.
The Stimulus Payments Got the Job Done
It’s important to remember the principal reasons the federal and state governments sent out stimulus checks in the first place: to help keep Americans and, on a wider scale, the economy, afloat. And that’s exactly what they did.
“Beginning in March of 2020, the Coronavirus Aid, Relief and Economic Security Act (Cares Act) authorized stimulus payments intended to help people navigate the economic downturn as a result of the Coronavirus pandemic,” said Robert R. Johnson, professor at Heider College of Business, Creighton University. “The stimulus payments helped avoid a significant economic downturn, as the 29.9% annualized GDP drop in Q2 of 2020 was immediately followed by Q3 GDP annualized growth of 35.3%.”
The Focus Right Now Is on Targeted Tax Credits
“While some states are experimenting with stimulus checks and something akin to a universal basic income, we are unlikely to see another federal stimulus check anytime soon,” said Jay Zigmont, PhD, CFP, founder of Childfree Wealth. “The focus right now at the federal level is on student loan forgiveness and tax credits such as the child tax credit. The Biden administration recently announced that they are looking into ways to help with caregiving (of children, elderly and others), but their intent is not a widespread stimulus check but targeted support. With a growing national debt, stimulus checks or similar programs are only likely in the case of national emergencies such as Covid.”
The Economy Is Thriving
Despite an avalanche of talk among economists about a looming recession, the U.S. economy is actually in pretty good shape. Because of this, more stimulus checks are unlikely.
“The U.S. economy is still doing pretty well, except for the tech, manufacturing and housing sector,” said Alvin Carlos, CFA, CFP, a financial planner and managing partner at District Capital Management. “Unemployment remains low at 3.5%.”
The US Budget Deficit Is Enormous
Another reason Americans probably won’t see more stimulus checks? The U.S. budget deficit in 2022 was tremendous, at $1.38 trillion.
“Conservatives will be strongly opposed to more stimulus checks [because of this],” Carlos said. “Also, the government is already expected to spend a lot of money when it starts implementing the Inflation Reduction Act.”
More Stimulus Checks Could Hurt the Economy
“There is no reason to believe more stimulus checks are coming given that Covid is over from an economic perspective and inflation is still running hot. Stimulus would only make the inflation problem worse,” said Mike Collins, a professor at Endicott College in Beverly, Massachusetts. “That being said, during our next economic downturn it wouldn’t be surprising to see them pull out stimulus checks again from their economic toolbox.”
More Payments Would Be Expensive and Difficult for the Fed To Pull Off
Dr. Tenpao Lee, professor emeritus of economics at Niagara University, is also of the opinion that more stimulus payments aren’t going to happen anytime soon.
“I don’t think we will get any more stimulus checks in the near future as the Fed tightened its monetary policies in early 2022 to fight for inflation,” Lee said. “As a result, it would be more expensive/difficult for the federal government to borrow money, and the government had unprecedented debts/deficits levels already. In addition, the confrontations with China and sanctions against Russia damaged the role of the USD as the sole global currency. The Fed’s ability to make independent monetary policies has been weakened as many countries decreased their reserves in the USD/Treasury holdings.”
There’s Debate Around Whether Americans Even Need More Stimulus Checks
Adding to the pessimism around the prospect of receiving more stimulus checks is the idea that Americans no longer need a helping hand.
“The economy has grown 25 million jobs since April 2020 and has more jobs than pre-pandemic,” said Doug Milnes, CFA, a personal finance expert for Money Geek. “The unemployment rate has returned to the pre-pandemic unemployment rate as well.”
In addition, the average hourly wage is at an all time high, Milnes noted. “This doesn’t mean certain individuals aren’t in dire straits, but as a whole, that’s a very strong picture.”
A Recession Likely Won’t Make More Payments Happen
Could a recession spur more stimulus checks? Again, unlikely.
“If a recession happens later in the year, I still don’t expect any stimulus checks,” Carlos said. “The government will mostly just rely on the Federal Reserve to lower interest rates and bring the economy back to life.”
Still, No One Knows for Sure
Though finance experts highly doubt another round of stimulus payments, they can’t say for certain that there won’t be more. Keep in mind that President Joe Biden has hinted at future relief.
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“At this point, it is unclear whether more stimulus checks will be distributed in the future,” said Percy Grunwald, co-founder at Compare Banks. “The Biden administration has proposed additional economic relief measures, including infrastructure spending and expanded access to child care, but it is unclear whether these proposals will include direct payments to individuals. The decision will likely depend on a variety of factors, including the state of the economy, political considerations and the effectiveness of previous stimulus efforts.”
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