{"id":47006,"date":"2026-09-10T16:59:02","date_gmt":"2026-09-10T16:59:02","guid":{"rendered":"https:\/\/financialrush.com\/?p=47006"},"modified":"2026-09-10T16:59:02","modified_gmt":"2026-09-10T16:59:02","slug":"trumps-5000-election-dividend-makes-no-economic-sense-economist","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=47006","title":{"rendered":"Trump’s $5,000 election dividend makes ‘no economic sense’: Economist"},"content":{"rendered":"

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U.S. President Donald Trump speaks on stage on the first day of the 2026 Republican National Convention at the American Airlines Center on September 09, 2026 in Dallas, Texas. <\/p>\n

Alex Wong | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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President Donald Trump<\/a>‘s promise of a $5,000 election “dividend” check<\/a> to every adult in the U.S. comes at a time when many Americans are feeling particularly strained. <\/p>\n

However, economists CNBC spoke with say the proposal is unlikely to become a reality. And even if it did, a one-time direct payment would do little to ease affordability pressures<\/a>, they said, and could raise consumer prices<\/a>\u00a0more in the months ahead.<\/p>\n

Just weeks before the November\u00a0midterm elections<\/a> \u2014 with consumers’\u00a0views of their financial situation<\/a>\u00a0largely pessimistic \u2014 Trump\u00a0on Wednesday said his administration would give every adult American citizen $5,000 if the Republicans win control of the U.S. House of Representatives and Senate. <\/p>\n

High prices have weighed on voters and are largely to blame for a long-term decline in consumer sentiment, according to a data analysis<\/a> from\u00a0PNC Financial Services<\/a>.\u00a0<\/p>\n<\/div>\n

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Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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In August, consumers’ short-term outlook slipped further into negative territory, according to a Conference Board<\/a> report. The University of Michigan’s latest consumer survey<\/a> also showed sentiment worsened\u00a0amid worries that inflation will remain elevated.\u00a0<\/p>\n

Yet direct payments to consumers are often considered inflationary, economists say, and could cause prices\u00a0to rise further \u2014 eroding the intended impact of a stimulus check.<\/p>\n

“It simply makes no economic sense,” Brian Bethune, an economics professor at Boston College, said of Trump’s announcement.<\/p>\n<\/div>\n

Why stimulus checks can fuel inflation<\/h2>\n
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With oil prices topping $100 per barrel<\/a> amid the ongoing war between the U.S. and Iran, and escalating trade tensions<\/a> with Canada and other countries, supply-side issues are driving prices up, Bethune said. <\/p>\n

“If you add spending to a supply problem, it will make that problem worse,” Bethune said. “It’s like bailing the water out of the boat and drilling a hole in the bottom of the boat at the same time.”<\/p>\n

There is recent precedent, he said: “We ran into this problem in Covid. We poured all kinds of spending out there\u2026 and we got an acceleration in inflation.”<\/p>\n

Pandemic-era fiscal stimulus contributed to an increase in inflation of about 2.6 percentage points in the U.S., according to\u00a02023 research<\/a>\u00a0from the Federal Reserve Bank of St. Louis.<\/p>\n

Economists said<\/a> 2021’s American Rescue Plan<\/a> indirectly raised prices by putting more money in consumers’ pockets. The consumer price index peaked at 9.1% in June 2022, the highest since 1981. It is now at 3.4%<\/a>.<\/p>\n<\/div>\n

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“Americans loved the stimulus checks during the pandemic, and many people would welcome a $5,000 check now as they struggle to make ends meet,” Heather Long, chief economist at Navy Federal Credit Union, said in an email. <\/p>\n

“But it would be a short-term gain followed by a lot of long-term pain,” she said. “It would exacerbate inflation and spike borrowing costs for homes, cars, credit cards, and businesses even higher.”<\/p>\n

CNBC contacted the White House for comment on the potential inflationary effects of Trump’s proposal.<\/p>\n<\/div>\n

‘Pushing the economy in the direction of a crisis’<\/h2>\n
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With inflation persistently tracking\u00a0above the Federal Reserve’s 2% target<\/a>, the perceived odds that the central bank will raise interest rates at its upcoming September meeting are increasing<\/a>.<\/p>\n

“The Federal Reserve should hike in September because the risks to inflation staying hot have risen,” Long said. “The bottom line is prices are still rising.”<\/p>\n

Meanwhile, high borrowing costs and higher prices for\u00a0necessities<\/a>\u00a0like groceries and gasoline have been a particular\u00a0pain point<\/a>\u00a0for most U.S. households.<\/p>\n

But in this context, sending out “mad money,” which is estimated to cost more than $1 trillion, is a bad idea, Bethune said. “You are increasing the deficit. You’ve got an [Federal Open Market Committee] that’s sitting on an inflation rate above target. You are pushing the economy in the direction of a crisis.”<\/p>\n

The U.S. national deficit, which occurs when the federal government’s spending exceeds its revenues, is nearing $1.8 trillion<\/a>, the Treasury Department reported in August.<\/p>\n

Any direct payments “would push up the already-high federal deficit, push up inflation, push up interest rates, and put America’s economy overall in a weaker position,” said Brett House, economics professor at Columbia Business School.\u00a0<\/p>\n<\/div>\n

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Still, Trump’s latest dividend pledge is not likely to become policy, House said.<\/p>\n

Although the president has floated the idea of making\u00a0direct distributions to Americans<\/a>\u00a0before, any such broad-based benefit program would require legislation passed by Congress.<\/p>\n

“Even if the president delivers on his new promise of dividend checks, such a politically driven initiative could be stopped by the courts or simply clawed back later by taxes,” House said.<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\n
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