FORT WAYNE, Ind. (WANE) — On Wednesday, the nation welcomed a new president. With the transition comes the possibility of a third stimulus check, but in the ever-changing economy, many are asking what’s next.
WANE 15 talked to John Kessler, the Director of the Center for Economic Education for Purdue University Fort Wayne to break down what you can expect.
“The government has really got a difficult situation to try and manage,” Kessler said. “Doing nothing is not really an option right now because the economy would really, really suffer.”
Last week, President Joe Biden announced a $1.9 trillion coronavirus relief plan that would see most Americans receiving a $1,400 stimulus check. This could ultimately help the economy if people spend it. However, many receiving the money are saving it. And there are still some who have yet to receive a check.
The reason for the delay is the same reason tax season has been pushed back, COVID-19. The tax season normally starts in late January but was delayed due to outgoing stimulus payments. When the government shut down back in March in 2020 those who filed late and by paper have seen a delay in checks. There is no tentative date on when that group would see their stimulus checks.
Currently, the United States is trillions of dollars in debt. Though the stimulus checks are seen as “free money,” it’s actually not free.
“Any government spending has to be paid back at some point,” Kessler said. “We are going to pay for it with taxes today or taxes tomorrow. The question is if we don’t spend the money now is it going to cause more harm when in reality we have time to pay it back later.”
Kessler says that as long as the economy opens, the government will be able to pay the money back. However, he believes that the country has to get its finances in order. Spending $3 trillion that the U.S. doesn’t have will lead to severe ramifications and in the long run, hurt the economy.
But what does the economy look like in the long run? Experts say it depends on COVID.
“There’s some uncertainty because we don’t know how long this [pandemic] is going to last,” Kessler said. “If we could have enough people vaccinated by this summer we can start opening up the economy again that’s really the number one thing we have to do, open the economy.”
If the third stimulus check goes through would the U.S. be able to send out even more stimulus checks? In theory, Kessler says yes. The government can ‘print’ an unlimited amount of money by inflating the currency however, it will have to be repaid back.
“We don’t know if politically stimulus checks are going to happen. We just had the inauguration today and we’ll see,” Kessler said. “With the new party in power, it’s more likely to see the checks than to not see them. They can propose all they want but it has to go through the house and the senate.”
Another stimulus check may not be guaranteed but Kessler says it’s a good time to put your finances in order.
“There is no time like the present to really sit down and get a plan in place of making sure that you are living within your means, that you got a budget, you have an emergency fund built up,” Kessler said. “A lot of people didn’t have an emergency fund saved up and this is just one more example of why it can be really really important.”
Next week the Gross Domestic Product data will come out for the fourth quarter of 2020. This data will help predict what the economy will do.