United States | A stimulating debate

California’s inflation-relief payouts are a bad idea

But not for the obvious reason

A woman shops for chicken at a supermarket in Santa Monica, California, on September 13, 2022. - US annual inflation slowed slightly in August, largely thanks to falling gasoline prices -- but likely not enough to satisfy the Federal Reserve and President Joe Biden, as high prices continue inflicting pain on Americans. (Photo by Apu GOMES / AFP) (Photo by APU GOMES/AFP via Getty Images)

Oct 12th 2022|WASHINGTON, DC

It sounds like a bad joke. In 2020 and 2021 the American government sent out pandemic-relief payments to tens of millions of households, worth thousands of dollars per person. This largesse led to a surge in consumer spending, which in turn fed into the high inflation now racking the country. So California is trying to help its residents—by sending out inflation-relief payments to millions of households, worth up to a thousand dollars. If the first set of payments contributed to inflation, can the second set of payments somehow minimise it?

This article appeared in the United States section of the print edition under the headline “A stimulating debate”