Long-Term Effects of Congress’ Ambitious Stimulus Packages
Congress has passed two stimulus packages in response to the COVID-19 pandemic. The CARES Act was passed last March while a follow-up package was passed in late December. Now, it appears a third stimulus package is on the way. But what long-term effects will this have on the economy and your financial life?
There are a lot of answers to that question with a lot of different impact points. Here are three areas to keep on your radar.
Why do we have these stimulus packages?
These packages are being delivered through Congress to folks who qualify because of the significant financial impacts of mandated government shutdowns due to COVID-19. While it may be a little intuitive, it’s worth stating again. Not everyone has been negatively impacted but there are many Americans who have been and are suffering from a financial standpoint.
Significant rise in national debt.
No one is talking a lot about this right now, but the significant rise in our national debt will impact us over the long term. It would be amazing to know that there was a great big magic pot of money from which Congress is pulling to implement these stimulus packages. The truth is all the checks and payments that Congress is distributing are being financed by debt. Specifically, by the selling of long-term treasury bonds.
Eventually the band has to be paid.
Just like any good rock show, the band eventually has to be paid. The United States has increased its national debt significantly over the last 12-18 months. Eventually that will need to be addressed. There are several ways that can happen including things like an increase in taxes or some productivity gains. It will certainly be a combination of things and because of how much the debt has grown, there needs to be significant measures taken.
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These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.