President Donald Trump speaks on the first day of the 2026 Republican National Convention at the American Airlines Center on September 9, 2026 in Dallas, Texas.
Alex Wong | Getty Images
President Donald Trump’s promise to give every American adult a $5,000 election “dividend” check comes at a time when many Americans are feeling particularly nervous.
But economists interviewed by CNBC said the proposal was unlikely to become reality. Even if that were to happen, one-off direct payments would do little to ease affordability pressures and could push consumer prices higher in coming months, they said.
Just weeks before November’s midterm elections, and despite a largely pessimistic view of consumer finances, President Trump announced Wednesday that his administration would provide $5,000 payments to every adult American citizen if Republicans win a majority in the U.S. House and Senate.
High prices are weighing on voters and are the main reason for the long-term decline in consumer sentiment, according to a data analysis by PNC Financial Services.
Consumers’ short-term outlook fell further into negative territory in August, according to a report from the Conference Board. The latest consumer survey from the University of Michigan also showed that sentiment has worsened due to concerns about persistently high inflation.
But economists say direct payments to consumers are often considered inflationary, potentially pushing prices up even further and undermining the stimulus’s intended effects.
Brian Bethune, an economics professor at Boston University, said Trump’s announcement “makes absolutely no economic sense.”
Why does stimulus promote inflation?
Bethune said supply-side issues are driving up prices, with oil prices above $100 a barrel amid an ongoing war between the United States and Iran and escalating trade tensions with Canada and other countries.
“Add spending to the supply problem and it’s going to make the problem even worse,” Bethune said. “It’s like pumping water out of a boat and drilling a hole in the bottom of the boat at the same time.”
He said there was also recent precedent: “We ran into this problem with COVID-19. They pumped in all kinds of spending, and inflation accelerated.”
Pandemic-era fiscal stimulus increased U.S. inflation by about 2.6 percentage points, according to a 2023 study from the Federal Reserve Bank of St. Louis.
Economists said the 2021 American Rescue Plan 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, but now stands at 3.4%.
“Americans loved their stimulus checks during the pandemic, and at a time when they are struggling to make ends meet, many would welcome a $5,000 check,” Heather Long, chief economist at Navy Federal Credit Union, said in an email.
“But it’s only a short-term gain, and there will be a lot of pain in the long term,” she says. “That would exacerbate inflation and make borrowing costs for homes, cars, credit cards and businesses even more expensive.”
Asked about the potential impact of Trump’s proposal on inflation, White House Press Secretary Davis Engle told CNBC in an email that the president has “consistently proven the skeptics wrong, in stark contrast to Democrats’ historic inflation record.”
“Pushing the economy towards crisis”
With inflation continuing to exceed the Fed’s 2% target, there is growing recognition that the Fed is more likely to raise interest rates at its next meeting in September.
“The Fed should raise rates in September because the risk of persistently high inflation increases,” Long said. “The bottom line is prices are still going up.”
Meanwhile, high borrowing costs and soaring prices for essentials like food and gasoline are particularly troubling for most American households.
But in this context, Bethune said it was a bad idea to send “crazy money” that is estimated to cost more than $1 trillion. “It’s widening the budget deficit. Inflation is above the (Federal Open Market Committee’s) target. It’s pushing the economy toward crisis.”
The U.S. national deficit, which occurs when federal spending exceeds revenue, is approaching $1.8 trillion, the Treasury Department reported in August.
Brett House, an economics professor at Columbia Business School, said any direct payments would “drive up the already high federal deficit, push up inflation, push up interest rates and leave the entire U.S. economy in a weak position.”
Still, the House said President Trump’s latest dividend pledge is unlikely to become policy.
The president has floated the idea of providing direct benefits to Americans before, but such a wide-ranging benefit program would require passage by Congress. Notably, President Trump previously supported the idea of a $5,000 “DOGE dividend” and a $2,000 “tariff rebate,” but neither materialized.
“Even if the president makes good on his new promise of dividend checks, such politically driven efforts could be blocked by the courts or simply rolled back in taxes later,” the congressman said.
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