$5,000 for Every American: Trump's Midterm Promise Sparks Market Speculation
Donald Trump has made a promise to every American adult - $5,000 if Republicans win in November. The 'Trump Dividend' plan would cost around $1.2 trillion, and while it sounds like a bold move, it's not the first time a president has tied an election result to cash payouts for voters.
Looking back at past instances, financial markets have reacted positively when stimulus checks are sent out. In January 2021, Joe Biden told Georgia voters that electing certain candidates would unblock $2,000 stimulus checks, and Democrats took the Senate soon after. Research found a significant jump in Bitcoin purchases around the exact $1,200 amount after Trump's first COVID checks arrived in April 2020.
Stocks showed a similar effect, with an NBER study finding that the first two US stimulus rounds increased retail buying and pushed up prices in stocks favored by retail investors. When Biden sent out $1,400 checks in March 2021, Bitcoin moved from roughly $56,500 to above $60,000 within days.
However, it's essential to note that free cash doesn't necessarily guarantee a rally. Former Republican Presidents George W. Bush sent tax rebates in 2001 and again in 2008, but stocks fell through much of both periods due to the overwhelming impact of the dot-com crash, 9/11, and the financial crisis.
Trump's $5,000 promise would dwarf any individual COVID payment, and whether it happens is another question. Congress would have to approve it, and JD Vance has suggested wealthy Americans could be excluded and tariffs could fund the plan, although current tariff revenues fall far short of the cost.