Household Stimulus Before a Recession

Economist Claudia Sahm proposes an idea, questionable, but an intriguing thought. She proposes the government could and should provide households with stimulus before a recession. But not with the heavy payments we saw during the pandemic, but small repeated payments when data suggests the economy is heading toward a recession and while we are in the midst of a recession. The idea is to keep enough money in the pockets of family to support them and small businesses during hard times without driving inflation too much higher.

My instinctual rejections were a) families would grow addicted to the free cash and eventually demand for more, b) the U.S. government is $31 trillion in debt so the 'government could' doesn't mean they 'should', c) and the potential effect on inflation would counter any Federal Reserve policy to decline it.

But she has much to say about its potential benefits and as intelligent adults we have the ability to entertain ideas without adopting them.


Get money to people in recessions, high inflation or not

Economists have a terrible track record at predicting recessions.

The last thing we need is more people dependent on the government.