Economic conditions could deteriorate, but right now they don’t warrant another check

A person with a shopping cart looking at a refrigerated item in a grocery store.

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Many Americans really want a stimulus check. But the state of the economy does not support one.


Key points

  • Today’s job market is very robust.
  • Despite warnings about a possible recession, it is too early to justify a fourth round of stimulus.

It’s no secret that many Americans are struggling financially right now. Not only has inflation caused living costs to skyrocket, but the Ukraine crisis has pushed up gas prices. Since many people don’t have savings to tap into, either because they depleted their cash reserves during the pandemic or because they never had money in the bank, many households really can’t make ends meet.

Indeed, many hard-pressed Americans are hoping lawmakers will somehow authorize a fourth stimulus check. But for that to happen, the US economy would have to take a serious turn for the worst, that is, get into recession territory. Right now, that’s not where we are, even though recession warnings are already flashing.

Are we headed for an economic recession?

Right now, the US economy is in a good place, despite inflation. In fact, it’s easy to argue that inflation is a sign of a healthy economy, despite the hit it tends to deal to cash-strapped consumers.

Often the cost of living will increase when demand for goods outstrips supply. And if demand is strong, it indicates that people have money to spend.

Meanwhile, the US job market is good and strong. In February, there were 11.27 million job openings, about 5 million more than the number of unemployed workers. The last time stimulus checks were issued, jobs were much harder to come by.

But recently, the bond market sent out a warning that, in the past, has been indicative of a recession: an inverted yield curve for US Treasuries. Typically, longer-dated bonds carry a rate of higher yield than shorter-dated bonds. The reason? Longer-term investors take more risk.

Earlier this week, the yield curve briefly inverted, meaning the 10-year Treasury yield fell below the 2-year Treasury yield. And while that reversal was temporary, we’ll have to see if it happens again.

To be clear, there is no need to sound an alarm about a pending recession. At the same time, however, economic conditions are not severe enough to support a fourth round of stimulus at this time. And that is something Americans will have to accept.

Make ends meet when costs are high

Unfortunately, today’s cash-strapped households may need to seek additional work on top of their regular jobs to offset higher costs of living. The good news is that the gig economy is full of opportunities in that regard. And so, those who can make that effort can manage to increase their earnings enough to keep up with expenses that their regular paychecks can’t cover.

Of course, if things get noticeably worse, then we could see lawmakers start discussing a fourth round of stimulus. As it is, some lawmakers are pushing for a gas-specific stimulus that is paid for during periods when fuel costs are extremely high, as is the case today. But so far, that gas stimulus is just an idea, and it’s a windfall that no one should trust just yet.

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