Plans for Rebates
Mon, 03/24/2008 - 1:00pm
According to a new CNN poll, most people do not plan on spending their rebate. I am curious as to what the economic impact of 20 percent of people spending this money will be, if this poll reflects reality. We could see different numbers once the checks go out and the question becomes, "What did you do with your rebate?"
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It will be spent
By John McClelland
Mon, 03/24/2008 - 3:54pm
It will be spent no matter how you look at it. Only 32% of those polled stated it would be saved, and 3% to charity.
The other 65% of us will be spending it, even if they put it towards paying off debt. Most people, intentional or otherwise, pay down their debt, but then go right back to spending with the new freed up credit line they possess. So even if Joe Blow takes his $600 to pay off part of his $1000 Visa bill, he will now view it as only having $400 on his Visa bill, with an extra $600 of room to buy more stuff. Joe may even be more inclined to spend it that way, due to the fact he gets cash back, air miles, etc on his Visa.
Assuming it won't be spent is assuming we are all frugal with our money and masters at not running a debt. Instead, most people in the US keep a debt of at least $6000 on credit cards. So the stimulus will eventually stimulate the economy- although the sector reaping the most benefit up front will be the credit industry.
A fair point
By Josh Berthume
Mon, 03/24/2008 - 4:29pm
This is a fair point, but probably also not the kind of stimulus that was hoped for, i.e. the retail kind.
Retail is secondary
By John McClelland
Tue, 03/25/2008 - 8:48am
In Joe Blow's case, his retail purchases come after he pays off his card to free up more credit that he can use in a store.
Although in the real world, none of these rebate checks are going to help stimulate the retail sector enough to make nay bit of difference. I have been sitting here at work for a year twiddling my thumbs because companies are opting not to import anything due to the weak retail sector and the weak dollar. US exports are booming but that isn't saying a whole lot considering we export crap.
Exports
By George Nassar
Wed, 03/26/2008 - 12:56am
"US exports are booming"
The interesting thing is, the dollar and its steady and long-running decline clouds that. I wouldn't be the first to make the argument that the dollar's devaluation (some say purposeful, for this end) has allowed us to artificially overvalue U.S. exports. Our production in pre-decline dollars has actually been slightly down, they say, but the dollar has been declining so much that the products exported are worth more in dollars in the international market.
It's an interesting argument, at least. I don't have data on that as of yet.
The flip side
By George Nassar
Tue, 03/25/2008 - 8:00am
Well, if it helps, keep in mind that many of those Americans won't have the option to re-spend the newly freed credit. Joe Blow won't spend the $600 he just used to pay off his $1000 Visa bill, because due to the scare in the credit industry, universal default, and the one account somewhere in there that Mr. Blow screwed up, his Visa account was already forced closed and is in arrears.
Not yet
By John McClelland
Tue, 03/25/2008 - 8:46am
They won't close your card just yet for a little mess up. They make sure to increase your interest rate and charge late fees to force up the balance to ensure it also goes over the limit, so they can charge you over the limit fees. How's that for a run on sentence?