Survey: More U.S. consumers to spend tax rebates on essentials
U.S. consumers faced with increasing energy and food costs plan to spend more of their tax rebate checks on necessities like gas and groceries rather than on discretionary items like electronics and clothes, according to a National Retail Federation survey conducted by BIGresearch.
The survey, which polled 8,347 consumers and was conducted from April 29 to May 7, found that consumers still plan to spend about 40 percent of their tax rebate checks, sending $42 billion back into the economy. But how they spend it has shifted slightly since a previous poll conducted in February soon after President Bush signed H.R. 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008.
The $152 billion measure provides tax rebate checks of up to $600 per working individual and $1,200 per married couple, plus $300 per child for families with children and new tax incentives for job-creating business investments.
The latest NRF survey found that 17.2 million people plan to use some of their tax rebate check to pay for gasoline, up from 12.1 million people who planned to do so in February. Another shift suggested by the survey has 21.2 million people using a portion of the check for food, up from 20.4 million people previously.
As a result, fewer people plan to spend rebate checks to buy furniture (2.7 million versus 4.0 million in February), purchase a vehicle (2.4 million vs. 3.2 million), or use it for 'me' time at a salon or spa (2.9 million vs. 3.5 million).
'The rising cost of groceries and gasoline means that discretionary spending is taking a backseat to necessities,' said NRF President and Chief Executive Officer Tracy Mullin. 'For many consumers, struggling with rising bills and lowering home values, economic stimulus checks could not come at a better time.'
According to the findings, consumers as a whole plan to spend 39.9 percent of their tax rebate checks, providing a $42.2 billion boost to the economy. Consumers will also use the money to pay down debt ($28.1 billion), save ($20.1 billion), invest ($3.4 billion) and pay medical bills ($4.9 billion). Consumers said they will also use $6.9 billion in 'other' ways.
Other findings of the survey suggests that women are more likely to spend and/or save portions of their rebate check, while men are more likely to pay down debt. Young adults of 18-24 years old will spend more of their checks (43.5 percent) than any other age group.
