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Stimulus Checks To Battle a Recession? Why It Could Happen

US President Joe Biden. Image Credit: Creative Commons.
US President Joe Biden. Image Credit: Creative Commons.

With a Recession Looming Can we Expect More Stimulus Checks?: Even as some analysts have suggested that the stimulus checks sent to Americans during the Covid-19 pandemic likely contributed to inflation, there have been repeated calls from some lawmakers to send additional money to help Americans due to said inflation. It has also been argued that the stimulus packages passed by Congress in 2020 and again in 2021 may have helped keep the country out of a deep recession, or even a depression.

Yet, that influx of money to businesses and certainly to individuals likely led to our current inflation – and it is now being debated whether any further stimulus could only serve to drive prices even higher. That wouldn’t be good for the national debt and it wouldn’t be good for Americans.

But what happens if the Federal Reserve’s effort to combat inflation by raising interest rates to cool the economy actually tips into a downturn, and leads to a recession?

Would a further stimulus then be necessary for Americans in need? For now, lawmakers are unlikely to push for one – Republicans have been critical of the Biden administration’s handling of the economy and with the mid-terms just months away, there would be little reason to give him a win.

Is a Recession Coming?

The issue could be different if/when the country is actually in a recession. Yet, President Joe Biden has repeatedly told reports that a recession isn’t inevitable and while an economic downturn isn’t as certain as the fact that Christmas is coming, sooner or later the bad times will return.

The doom and gloom outlook about a possible, and even likely, recession isn’t one being raised just by critics of the White House. Even Federal Reserve Chair Jerome Powell admitted this week, “It’s certainly a possibility.”

Powell told lawmakers on Wednesday, “It’s not our intended outcome, but it’s certainly a possibility.”

And while few likely prepare for the Christmas holiday season at the official start of summer, it is never really too early to think about what will come – in this case, sooner or later. That is why some economists have suggested that the government may have to send out checks to help Americans in the next recession, especially if the economy goes into a tailspin.

Even as the stimulus may have led to the current inflation, experts contend it likely saved the economy from something that was worse, such as a depression.

Stimulus Checks: Money For Daily Life

What could make the next – yet still very much hypothetical – stimulus checks so critical is that they could keep Americans afloat when they need it most. Continued spending is necessary in bad times is important, otherwise, companies must respond by laying off additional workers, which in turn often only prolongs a recession.

What is also notable about stimulus checks is that they can often have an impact within days of hitting bank accounts. Though some of the past stimulus money was certainly used to pay down debt or was socked away/invested for an even rainier day, most Americans tended to use the money almost immediately.

There is little reason to think that the next money wouldn’t be quickly put back into the economy. History has shown that stimulus can help Americans in need.

“I expect stimulus checks to be used again,” Claudia Sahm, a macroeconomic policy consultant and former Federal Reserve economist, told CNBC. “They worked.”

However, it will always come with a cost – it will just be one that future generations will eventually have to worry about.

Now a Senior Editor for 1945, Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military hardware, firearms history, cybersecurity and international affairs. Peter is also a Contributing Writer for Forbes.

Written By

Expert Biography: A Senior Editor for 1945, Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers, and websites with over 3,000 published pieces over a twenty-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, and international affairs. Peter is also a Contributing Writer for Forbes. You can follow him on Twitter: @PeterSuciu.