Fact Check: Would stopping government overspending ‘end’ post-COVID inflation?
No
President Trump approved $3.1 trillion in COVID stimulus and President Biden approved $1.9 trillion more. Estimates vary on the contribution of this spending to inflation. MIT researchers attributed 42% of post-pandemic inflation through February 2022 to the stimulus while FRED estimated it accounted for about one-third in January 2023.
Conversely, Brookings concluded in August 2024 that “the vast majority” of inflation was driven by “supply-linked factors.” These include supply chain disruptions due to COVID lockdowns and the Russian invasion of Ukraine in 2022, which made energy more expensive worldwide.
Post-pandemic inflation dropped from its 9.1% peak in July 2022 to 2.9% as of December 2024 following supply chain restorations, declining energy prices, interest rate hikes, and a cooling of consumer spending. The Federal Reserve’s target inflation rate is 2%.
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Sources:
FRED Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
AS Third stimulus check: comparing Trump and Biden’s stimulus packages
MIT Sloan Management School Federal spending was responsible for the 2022 spike in inflation, research shows
Brookings COVID-19 inflation was a supply shock
EconoFact Thinking Can Make It So: The Important Role of Inflation Expectations
EconoFact Taming Inflation: No Pain No Gain?
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