Stimulus Package & Tax Rebate Survey
Here’s how Americans plan to use their tax rebate checks…
Intended to help Americans cope with a slumping economy and rising food and gasoline prices, approximately 130 million households will receive between $300 and $1,200 as the centerpiece of the government’s $168 billion economic stimulus package enacted in February. The tax rebates began reaching people last week - starting with those who used direct deposit to file their taxes. Paper check rebates began arriving in citizen mailboxes on May 9th. And according to the IRS, rebates should be in the hands of all eligible taxpayers (taxpayers who filed an income tax return for 2007) by July 11 of this year.
Merchants are anxiously hoping for a windfall with consumers to spend their rebate in retail stores. The National Retail Federation (NRF) estimates that about $43 billion of the $106 billion will be directly pumped into the retail sector. “[The] checks should have the desired effect of both bolstering the economy in the short term and putting consumers in a better position to spend for the future,” said NRF CEO Tracy Mullin. However, an Experian Consumer Direct poll shows consumers have different plans for their rebate checks:
- 19% - would pay off debt
- 16% - would pay utility bills
- 15% - would increase spending
- 10% - would tackle home repairs
- 07% - would travel
- 04% - purchase new furniture or appliances
- 02% - purchase a new car
- 27% - no response
Other key survey findings include the following:
- 41% of consumers “strongly agree” that the economic stimulus package is not enough to help distressed homeowners
- 20% of respondents “disagree” that the stimulus package will harm the U.S. economy by increasing the federal deficit
- 16% of those surveyed said the effect of the stimulus package will lead to an increase in consumer spending
“The current credit crunch has forced many consumers to reprioritize their spending habits and to more effectively manage their personal finances,” said Ty Taylor, group president of Experian Interactive. “This is evident in the survey results, as nearly 20 percent of Americans plan to use their federal economic stimulus package rebate to help pay off a debt.”
According to the NRF, the additional $43 billion spending stimulus would potentially rank as the third-biggest selling event for retailers this year, after Christmas and back-to-school spending and ahead of Valentine’s Day and Mother’s Day. Although the additional stimulus may not be enough to completely prevent the overall softening in retail spending, analysts say it could at least weaken the downward spiral. But success is dependent on consumers, and according to the survey results - retailers could be in for a big disappointment.
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