- US May Raise Rates Before Jobs Recover: Fed's Plosser
- Ford Says November Sales Rise; Crossover Cars Do Well
- AIG Slashes US Debt Under Deal With New York Fed
- US Manufacturing Grows Less Than Expected
- Pending Home Sales Have Record Rise; Construction Flat
- Commercial Property Fears Are Overblown: Zell, LeFrak
- Trump: Time to Force Banks to Start Lending
- Accused Fraudster Rothstein Arrested
- What to Expect From Obama's Afghanistan Speech
MOST SHARED
- Commercial Property Fears Are Overblown: Zell, LeFrak
- Good Sign for the Economy: 'Greed' Makes a Comeback
- Dubai Stocks Could Fall a Further 30%: Charts
- Dubai Markets Close Sharply Lower for Second Day
- Somali Sea Gangs Create Pirate Stock Exchange
- More Late on Auto Loan Payments in Third Quarter
- US Manufacturing Grew Less Than Expected in November
- Pending Home Sales Have Record Rise; Construction Flat
- AIG Slashes US Debt Under Deal With New York Fed
- Farrell: Forget About Dubai—Worry About This
Text Size 
The $48 billion in tax rebates sent out to American consumers this spring has helped keep the US economy out of a recession, but analysts believe the impact may only be temporary.
The rebates, approved by Congress earlier this year, helped push May retail sales up at twice the expected rate. But consumers are still facing rising gas costs, falling home prices and the struggling job market, so the rise is probably short-term, says Mark Zandi, chief economist for Moody's Economy.com.
 |
"Come October, there are probably going to be weaker numbers," Zandi said. "People are spending the rebate checks very quickly, so the stimulus is going to fade very quickly."
Some recipients reportedly spent their money back in April, before they even received the checks, Zandi said. Only 29 percent of shoppers saved their checks, while 41 percent of households used them to pay off credit cards or mortgage debts, according to TNS Retail Forward.
About 28 percent of consumers reportedly used their rebates for everyday expenses like gas and groceries, while only 14 percent used them for special purchases, such as jewelry, according to the research and consulting firm.
Supermarkets, discount chains, consumer electronics stores and online retailers have benefited the most from rebates, with discounters such as Wal-Mart [WMT
Loading...
()
]
and Target [TGT
Loading...
()
] posting their largest sales increases in 14 months.
Still, shoppers are still in a "belt-tightening mode," and the retail trend significantly weakens when the checks are taken out of the mix, says Frank Badillo, senior economist for Retail Forward.
"From what shoppers are telling us, they are looking to cut back their spending pretty much across the board," he says. "The stimulus checks are hiding that."
Badillo predicts the rebate checks will further extend the economy's growth rate into the third quarter but will tail off in the fourth, he said.
Bill Seidman, a consultant for RBW Capital Management and CNBC contributer, disagrees, saying the checks will provide a more permanent boost to the economy.
"The consumer seems to be hanging in there despite oil and gas prices, despite all the uncertainties in the job market," he says. "What it says is we don’t have a recession and aren’t going to have one."
—Reuters contributed to this report
Print
Email
- Goldman Sachs has forbidden employees from gathering in private holiday parties of 12 or more.
- Since its launch in 1998, Google has become a primary force on the Internet. How much do you know about the company?
- What do the gifts from the 12 Days of Christmas cost this year, and how do they compare to 2008?
- A conservative author aims to remind readers why capitalism works for the common good.
- A recent issue of ESPN Magazine was one of its top sellers ever, and it only took scantily clad athletes to make it happen.
- The continued real estate boom in China is partially fueled by a generational flood of newlyweds.
Data is a real-time snapshot *Data is delayed at least 15 minutes