Third Stimulus Check Gets Wall Street Support; Inflation From COVID Bill 'Will Be Small'

President Joe Biden’s $1.9 trillion stimulus plan, which includes $1,400 checks for eligible Americans, recently received support from Wall Street economists.

Democrats have long argued that the government would need to spend nearly $2 trillion to help the U.S. economy recover. Republicans argue that passing a bill with large spending levels would cause inflation.

However, economists at major investment banks in Wall Street, including UBS economist Alan Detmeister, said Wednesday that the $1.9 trillion package’s effect on inflation “likely will be small.”

Inflation will likely rise to 1.8% in 2022 and 1.9% in 2023. It may overshoot 2% beyond 2023 if the U.S. economy strengthens.

Michelle Meyer, the head of U.S. economics at Bank of America, said the package would cause a difficult but successful balance.

"Market participants are looking for stronger economic growth to push up inflation but not trigger Fed tightening too quickly," Meyer’s team said in a note published Friday. "It is a difficult balance, but so far highly successful."

The U.S. House Committee on Friday released a nearly 600-page coronavirus relief bill. The massive legislation includes more aid for vaccine distribution, and expansion of the $400 federal unemployment benefits, and a third round of stimulus checks amounting to $1,400.

Millions of single taxpayers making up to $75,000 a year will receive $1,400 checks. Couples making up to $150,000 annually will get $2,800 checks. The new proposal will also send out $1,400 for each child and adult dependents.

“We just have people who are suffering, food banks with lines going around the block across the country. We need to get money in people’s pockets. And this is the quickest way to do that,” Rep. Pamila Jayapal, D-WA, said. She is currently chair of the Congressional Progressive Caucus.

The House of Representatives is expected to begin voting on the stimulus bill this week through budget reconciliation. The process will allow Democrats to pass the legislation by majority vote even without support from the Republicans.

“The Senate is on track to send a robust $1.9 trillion package to the president’s desk before the March 14 expiration of Unemployment Insurance benefits. We will meet this deadline,” Senate Majority Leader Chuck Schumer wrote in a letter to Democrats on Friday.