Don Ryan/AP
A customer loads wood under a marquee
sign urging people to spend their tax
Tigard, Ore., Monday, May 5,
2008. (AP)

With Rebate Checks Spent, Retailers Face Gloomy Months Ahead

August 08, 2008 01:10 PM
by findingDulcinea Staff
Most of the roughly $100 billion in tax rebates has now been deposited in Americans’ bank accounts. But the anticipated boost in spending has been disappointing and things are likely to get worse.

30-Second Summary

The Bush administration’s economic stimulus package was supposed to encourage people to spend, but it appears most of it went to pay credit card bills or supplement savings accounts, MSNBC reports.

More than 130 million households received economic stimulus checks this year—about $600 per person and $1,200 per couple.

Consumers are “filling up their SUVs, their home equity values are plummeting, and they’re feeling a lot of pressures,” said Goldman Sachs retail analyst Adrianne Shapira.

Those pressures explain why retailers didn’t see a bigger lift in July, as some industry experts had expected. In a survey conducted in by retail consultant TNS Retail Forward, 28 percent of consumers said they used the stimulus check to pay off credit cards, 27 percent used it to pay for everyday expenses, 20 percent said they put the money into savings, and only 11 percent said they used the money for discretionary purchases, like a new TV.

Retailers don’t expect sales to pick up for the rest of the year. Some report that back-to-school shopping is already off to a slow start.

For Atlanta resident Andrew Jenkins, there was no question he would use the $600 stimulus check he received for necessities, like child support and bills, although he wishes he had some money left over. “You feel like you’re taking care of things, and that feels all right,” he said to the Los Angeles Times. “But you wish you had something for yourself.”

Headline Links: Retailers see little boost from stimulus checks

Background: Economic factors behind the stimulus package; retailers were hopeful

Opinion & Analysis: Pay off debt instead of spending

Reference: Rebate checks explained by the IRS


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