Clothes, food could get smaller slice of rebates
Economists see consumers paying down debt; card issuers could benefit
By Laura Mandaro, MarketWatch
Last update: 6:40 p.m. EST Jan. 29, 2008
SAN FRANCISCO (MarketWatch) -- The nation's clothing stores and restaurant chains, two beneficiaries of the 2001 tax rebates, may get short shrift from the delivery of the government's tax-rebate checks, with Americans looking to pay down credit cards and fill up their fuel tanks.
As for retail, "whatever effect we would see would be insignificant and of no duration," according to Bernard Hastings, economic adviser for the Federation of Credit and Financial Professionals, which represents risk managers at consumer-goods companies and other businesses.
Michael Niemira, chief economist with the International Council of Shopping Centers, is similarly skeptical that retailers will get a noticeable boost from the individual tax-rebate checks under discussion in Congress. "You'll be hard-pressed" to see purchases from the potential rebate checks show up in retailers' results, he said. "I assume a lot will go into debt reduction."
On Tuesday, the House passed a $150 billion stimulus plan backed by the Bush administration that would send $300 to $600 rebate checks to qualified earners. Senate lawmakers are now preparing to debate a $156 billion economic-stimulus plan that would write $500 tax-rebate checks to any American making at least $3,000 in qualifying income, including Social Security benefits.
What happened last time
When U.S. taxpayers opened their mailboxes to a combined $38 billion in rebate checks during the 2001 recession, a lot first went into the piggy bank or to pay off bills, and then went to malls and eateries.
High gasoline prices and greater credit-card debt, not to mention higher mortgage payments, are likely to chip away at the expected rebate dollars.
Studies of what happened after the U.S. government mailed $300 to $600 rebates to households between July and September 2001 found that Americans...(click to see full story)
By Laura Mandaro, MarketWatch
Last update: 6:40 p.m. EST Jan. 29, 2008
SAN FRANCISCO (MarketWatch) -- The nation's clothing stores and restaurant chains, two beneficiaries of the 2001 tax rebates, may get short shrift from the delivery of the government's tax-rebate checks, with Americans looking to pay down credit cards and fill up their fuel tanks.
As for retail, "whatever effect we would see would be insignificant and of no duration," according to Bernard Hastings, economic adviser for the Federation of Credit and Financial Professionals, which represents risk managers at consumer-goods companies and other businesses.
Michael Niemira, chief economist with the International Council of Shopping Centers, is similarly skeptical that retailers will get a noticeable boost from the individual tax-rebate checks under discussion in Congress. "You'll be hard-pressed" to see purchases from the potential rebate checks show up in retailers' results, he said. "I assume a lot will go into debt reduction."
On Tuesday, the House passed a $150 billion stimulus plan backed by the Bush administration that would send $300 to $600 rebate checks to qualified earners. Senate lawmakers are now preparing to debate a $156 billion economic-stimulus plan that would write $500 tax-rebate checks to any American making at least $3,000 in qualifying income, including Social Security benefits.
What happened last time
When U.S. taxpayers opened their mailboxes to a combined $38 billion in rebate checks during the 2001 recession, a lot first went into the piggy bank or to pay off bills, and then went to malls and eateries.
High gasoline prices and greater credit-card debt, not to mention higher mortgage payments, are likely to chip away at the expected rebate dollars.
Studies of what happened after the U.S. government mailed $300 to $600 rebates to households between July and September 2001 found that Americans...(click to see full story)
