Posted on 08/20/2003 4:47:07 AM PDT by AntiGuv
SAN FRANCISCO (CBS.MW) - Almost half of Americans who've received tax-rebate checks have used the money to pay off their debt -- not spent it in the mall, according to a recent CBS News/MarketWatch poll.
Thirty percent of those surveyed said they've received their rebate checks and of those, 46 percent said the money went to pay bills. Another 29 percent said they've saved or invested the rebates, while just 18 percent said they spent it.
The results are at odds with the Bush Administration's hope, and possibly that of retailers, for the tax rebate: that Americans would spend the money to help stimulate economic recovery.
The statistics are similar to the results of another poll conducted two years ago, during the first round of tax cuts. In 2001, 43 percent of tax rebate recipients said they used their check to pay bills, 32 percent saved or invested the money and just 15 percent spent it.
Two consumer credit reports released last week dovetail with the poll's findings.
The Cambridge Consumer Credit Index, a monthly survey on credit card use, fell to a reading of 55 in August from 60 in July, indicating that consumers are less willing to take on new debt.
And a report from the Federal Reserve showed a rare decline in consumer credit for the month of June. Total consumer credit, excluding mortgage-backed debt, fell $400 million in June to $1.761 trillion, the Fed said. See full story.
As for the people surveyed in the CBS poll, about 55 percent said they had not yet received their rebate check, and about 13 percent of the respondents said they did not expect to receive one.
Those who did receive it were no more likely than those who didn't to say the recent tax cuts would help create jobs.
But the tendency to pay bills rose as household incomes fell. Of those Americans with annual household incomes totaling less than $50,000, 55 percent said they used their tax rebate to pay bills. By comparison, in households bringing in $50,000 or more, just 34 percent used the funds to pay bills. More of those in the higher-income households reported they either saved the money or invested it.
CBS News conducted the poll among a random sampling of 798 adults across the nation interviewed over the telephone on August 11 and 12. The margin of error is estimated at plus or minus four percentage points.
I ordered my son's college textbooks at the beginning of August over the internet, cost about $400.
Had to charge them because I ordered them online.
I thought when the check arrived, that's handy, it'll cover the cost of the books.
Didn't need to use that money per se to pay the bill, and would have paid it anyway if the check hadn't arrived, but just associated the check with the books.
Maybe that's what other folks meant by "paying off debt."
Exactly! Plus, there are probably millions of Americans who increased their credit card spending in anticipation of getting the refund. And, of course, CBS has not even mentioned the possibility that people are not answering the question honestly. It sounds a lot more fiscally responsible to tell the pollster that you will use the money to pay off debt rather than on a frivolous purchase. I bet a poll asking how many people plan to go to church this Sunday would yield a higher percentage of intended rather than actual church goers.
A president does not have many avenues available to stimulate the economy. Keeping taxes and interest rates as low as possible are about it. The democrats, by blaming the Bush policies for the recession, are blaming the candles for the small amount of light during the blackout.
Whether it's $4, $40, $400, or $4000, it's better off in the hands of the taxpayer than in the government's.
ROFLMAO
30% received checks and of that 30%, 18% spent it.
You can make stats say whatever you want.
BTW since when do we live in a closed economy? Any money not in the government's hands is OK by me regardless of where it ends up.
Well, look at a Chicago Math text book. If you really, really feel that this represents a majority, then it does.
OK, you liquidate a debt, yours. Makes sense so far.
the other 99 percent goes out to other customers - investments in business new loans.
Now you create a new debt and it is more likely a consumer rather than business debt. So what has happened is a debt transfer from one individual to another. In essence, we are back to square one ;-)
No argument here, but this is being treated as the Nations Salvation. It will be nothing more than a ripple. I am all for getting them completely out of my paycheck, rather than these silly Tax games. That would have an impact. Blackbird.
Correct, but your premise is that by $-volume an equal number of debtors stepped up to borrow that money again. But the point of the revolving credit reports is that, no, on balance, revolving debt went down, and other reports show re-fi and mortgage apps falling as well. The valid point has been made that with lower balances, folks may run up their cards again in the future.
However, even if other borrowers stepped up or revolving credit is run up in the future, the velocity of money slows because debt was repaid in the 1st transaction, rather than spent.
Hardly! Someone bought something with that new debt! This improves our economy just as effectively as spending it at the Mall.
No. Repaying debt is the compensation of prior spending of borrowed money. It is not additional spending.
I think you are confusing the velocity of money with the multiplier-effect.
No. The multiplier effect is the result of banks making multiple loans (assuming debtors step up) less the reserve req on each loan. But to make multiple loans, the money has to come back in multiple times. Each time it comes in, it is loaned out less the reserve. Each time a loan is made from the 'same' money supply (less a reserve) the velocity of money increases (assuming the loaned out money is spent on something) and the money supply 'multiplied'.
But the velocity of money can increase without multiplying when instead of saving, someone buys something with cash. But a cash purchase only increases the velocity, it does not increase the banks 'multiplier effect'.
They are related, but not the same.
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