Stimulus checks are payments made by the government to taxpaying consumers to prompt economic activity by increasing the money taxpayers get when the economy is deteriorating. These payments boost the economy by encouraging spending and keeping the consumer outlook strong. The stimulus checks have big economic benefits, for example, reducing poverty and unemployment during the COVID-19 pandemic, which was not worth it as the checks caused inflation.
One benefit of stimulus checks on the economy is reduced poverty. The checks helped to keep people afloat during the covid-19 pandemic. According to the U.S. Census Bureau’s supplemental poverty measure, stimulus checks moved 11.7 million people out of poverty in 2020 (Fox, 2019).
The rate of poverty dropped from 11.9 to 9.1 percent. Stimulus checks led to a significant decline in poverty during covid-19. Stimulus checks cushioned workers during the economic crisis, making the economy stable. The COVID-19 pandemic led to many people losing their jobs, thus increasing the unemployment rates globally. The stimulus checks played an important role in aiding the economy to return to its pre-pandemic levels. In April 2020, when the unemployment rate was at a disastrous rate of 14.7%, Americans received a stimulus check of up to $1200 with the CARES Act (Baker et al., 2020). The economy bounced back in record time due to the stimulus checks.
Although the stimulus checks significantly benefited the economy, the checks were not worth it as they became political and caused inflation. The checks stocked higher prices for the people it was initially meant to help, leading to a financial struggle as low-income people could not absorb higher prices (Armantier et al., 2021). The checks were politically use as democrats campaigned for larger stimulus checks. The worth of the stimulus checks is overpowered by the negative effects experienced.
The stimulus checks have various economic benefits, such as reducing poverty and unemployment. The checks increase consumer confidence and buying power which helps to reduce poverty. Workers were cushioned during the covid-19 pandemic as they were able to keep their jobs. However, the stimulus checks became political and caused inflation through the higher prices stocked. The stimulus checks benefit taxpayers but are not worth it as they lead to various negative effects.
References
Armantier, O., KoÅŸar, G., Pomerantz, R., Skandalis, D., Smith, K., Topa, G., & Van der Klaauw, W. (2021). How economic crises affect inflation beliefs: Evidence from the Covid-19 pandemic. Journal of Economic Behavior & Organization, 189, 443-469. Web.
Baker, S. R., Farrokhnia, R. A., Meyer, S., Pagel, M., & Yannelis, C. (2020). Income, liquidity, and the consumption response to the 2020 economic stimulus payments (No. w27097). National Bureau of Economic Research.
Fox, L. (2019). The supplemental poverty measure: 2016. Current population reports, p. 60-268.