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Lawmakers have been going back-and-forth over the terms of the next stimulus relief bill.
They’ve battled over terms involving benefits like aid to schools and coronavirus testing but one area where they have been an agreement and for a while is stimulus checks.
But do we really need stimulus checks or would we be better off with something else to jumpstart the economy?
Yeva Nersisyan, Associate Professor of Economics at Franklin & Marshall College, thinks that stimulus checks may be the “least important” type of aid.
The thinking is that the stimulus checks go to everybody, regardless of whether or not they really need them.
As long as you make under $99,000 you will receive some form of stimulus aid relief.
Meanwhile, if you make over that amount but are currently unemployed you won’t receive a stimulus check.
Nersisyan questions if those stimulus checks will get back into the economy and help spur economic growth.
“If I get a stimulus check, I’m not going to spend it,” says Nersisyan.
“I’m going to save it, because there’s nothing to spend it on. But somebody who lost their job and gets unemployment benefits, then they’re definitely spending the money. That money gets recirculated back into the economy more so than the stimulus checks.”
This is something that others have argued for a while as well.
They believe that the paycheck protection programs and unemployment benefits provide much more direct stimulation to the economy than stimulus checks.
Those mechanisms may provide better or at least more direct growth to the economy by injecting funds into it faster, but only a small minority have used their checks to save money.
The Census reports that only 14% of recipients who were surveyed over the summer planned to mostly save their stimulus check.
And almost 90% of adults with household incomes of $25,000 or less planned to use their stimulus payments to meet expenses.
The vast majority of Americans reported using their stimulus check to pay for things like food, rent, gas, electricity, cable, etc.
I think the whole point of a stimulus package is to attempt to stimulate economic growth in a variety of ways.
It’s a combination of unemployment benefits, stimulus checks, small business relief, that all work together to get the economy moving.
I think there is also something to be said about the morale of receiving this type of aid in a time like this.
It just helps to give people a little bit more hope that recovery is happening and that the end is near.
I think helping small businesses that have been hurt and helping people who have lost their jobs is more important but I don’t think stimulus checks are significantly below those on the relief totem pole.
If a large percentage of recipients were not spending them then I could see that but with only 14% saving them, I still think stimulus checks are pretty important for a recovering economy.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.