The Hamilton Project
The Hamilton Project
  • Newsletter Signup
  • News and Commentary
  • Brookings
  • Topics
    • Economic Security & Inequality
    • Education
    • Effective Government
    • Employment & Wages
    • Energy & Climate
    • Health Care
    • Healthy Economy
    • Infrastructure
    • Recessions
    • Social Insurance
    • Tax Policy & Budget
    • Technology & Innovation
  • Publications
  • Data
  • Events
  • About
    • Mission and Vision
    • Advisory Council
    • Staff
    • Careers
    • Contact Us
  • Search
All Publications
Share
Policy Proposals

Direct Stimulus Payments to Individuals

By: Claudia Sahm
May 16, 2019
Social Insurance
Full Paper

The Problem

During recessions growth in consumer expenditures in the United States slows markedly—and in many cases declines. Consumer spending makes up about 70 percent of aggregate expenditures in the economy, and sharp slowdowns in consumer spending can exacerbate employment losses and reduced production, making a recession even worse. 

The Proposal 

As a response to these problems, Sahm proposes to distribute stimulus payments to individuals automatically in response to recessions. Recent research finds that broadly distributed, lump-sum payments to individuals directly boost spending and help stabilize demand, making these types of payments effective responses to recessions. Sahm’s proposal would offer lump-sum annual payments to individuals when the three-month average national unemployment rate rises by at least 0.50 percentage points relative to its low in the previous 12 months. The total amount of stimulus would offset about half of the slowdown in consumer spending, totaling about 0.7 percent of GDP.  

Full Paperpdf

Related Links

Recession Ready: Fiscal Policies to Stabilize the American Economy

Contact

Media Inquiries

Marie Wilken
Phone: (202) 540-7738
[email protected]

Author

Claudia Sahm

Section Chief, Consumer and Community Research Section, Board of Governors of the Federal Reserve System

Related Content

View All Publications
News

A year after Dobbs, House GOP proposed taking food from hungry babies

News

How an aging population poses challenges for U.S. economy, workforce and social programs

News

Making contraception free for low-income, uninsured women could prevent many unplanned pregnancies and abortions, new report shows

Contact Us

THP Newsletter

Stay up to date with The Hamilton Project by signing up to receive the newsletter.

This field is for validation purposes and should be left unchanged.

Copyright 2023 The Brookings Institution. Terms and Conditions. Build by Social Driver.

  • Topics
    • Economic Security & Inequality
    • Education
    • Effective Government
    • Employment & Wages
    • Energy & Climate
    • Health Care
    • Healthy Economy
    • Infrastructure
    • Recessions
    • Social Insurance
    • Tax Policy & Budget
    • Technology & Innovation
  • Publications
  • Data
  • Events
  • About
    • Mission and Vision
    • Advisory Council
    • Staff
    • Careers
    • Contact Us
  • Search
  • Newsletter Signup
  • News and Commentary
  • Brookings
Close Modal
Close Modal
close modal icon