Checks Could Exacerbate Inflation

While $2,000 payments could help many Americans cover rising grocery, insurance, and utility costs, some economists warn that stimulus checks could worsen affordability pressures.

The issue is that while some recipients might use the money to reduce debt, others would likely spend it immediately. That spike in demand, without a corresponding increase in supply, could drive prices higher.

Many Republicans blamed former President Joe Biden’s 2021 stimulus checks for contributing to inflation, making it politically challenging to support similar payments under Trump.

Research indicates those checks were one factor behind a four-decade high in inflation, though trillions in other stimulus—including Trump’s 2020 payments and the Paycheck Protection Program—also played a role.

Even some economists aligned with Trump are skeptical. “Sending out checks to people is a bad way to stimulate the economy,” said Stephen Moore, co-founder of Unleash Prosperity and former Trump adviser. “If there is tariff revenue, that should be used to cut income taxes across the board. Stimulus checks only stimulate inflation.”

Using tariff revenue for direct payments could also spook bond investors, pushing up Treasury yields that influence loans and mortgages, making borrowing more expensive.

“What Congress and Trump are trying to do with stimulus, the bond market could take away instantly,” said Ed Mills, Washington policy analyst at Raymond James.

Historically, stimulus checks are reserved for emergencies, like the 2008 financial crisis or the 2020 pandemic.