Do Americans Need a Fourth Stimulus Check? Bank of America Says Nope.

Stimulus Payment Tax Credit

Do Americans Need a Fourth Stimulus Check? Bank of America Says Nope.

If Moynihan is right, it means that two-thirds of Americans who received their stimulus checks simply cashed them in without using them to stimulate the economy.

In a CBS interview on Sunday, Bank of America CEO Brian Moynihan discussed the economic recovery. Moynihan’s outlook was positive; he noted that spending had increased by 20 percent from 2019 levels, indicating a healthy economic recovery; he also argued that, according to Bank of America’s projections, the U.S. economy would grow by 7 percent in 2021 and 5.5 percent in 2022 – numbers that would be regarded as astonishingly good in any normal year. For reference, GDP grew by 2.2 percent in 2019, 2.9 percent in 2018, and 2.4 percent in 2017; a 7 percent increase would be the highest growth rate since 1984.

However, possibly Moynihan’s most interesting comment came in regard to the Treasury Department’s stimulus payments, many of which were deposited in Bank of America accounts. Based on internal data from the bank’s customers, Moynihan revealed to the CBS hosts, “Our consumers have lots of money in their checking accounts […] They have not spent about 65 to 70 percent of the last couple of rounds of stimulus.”

If Moynihan is correct, this fact is extremely significant – and does not bode well for Americans who support a fourth round of stimulus payments.

The reason is that the rationale for a stimulus check is the idea of the “stimulus” – that putting money in people’s hands will cause them to spend that money. Rather than a form of individual welfare payment, stimulus payments are intended to artificially induce spending in the economy, preventing it from shutting down. These measures are expensive, but the alternative can be much more expensive.

If Moynihan is right, though, it means that two-thirds of Americans who received their stimulus checks simply cashed them in without using them to stimulate the economy. This suggests that the economic recovery does not need a fourth stimulus payment to continue.

Moreover, the Peter G. Peterson Foundation has estimated that the second and third rounds of stimulus – passed in December 2020 and March 2021 – together cost taxpayers a total of $575 billion. If two-thirds of that money has not been spent, that indicates that $400 billion is sitting around.

Moreover, President Biden clearly has other priorities for $400 billion. His American Families Plan includes, among other objectives, an increase in the Child Tax Credit, free community college, and healthcare subsidies – all of which add up over time.

It’s important to note that, while Moynihan’s data is bad news for those who support a fourth stimulus check, it is actually great news for the economy at large. If people do not feel the need to spend their stimulus payments, it means that they have money to spare, and further stimulus spending is unnecessary.

Trevor Filseth is a current and foreign affairs writer at the National Interest