WASHINGTON – Most Americans are planning to spend their stimulus rebate checks to pay down existing debt or add to their savings, not to fuel the kind of consumer spending that would bolster the economy, a new Los Angeles Times/Bloomberg poll has found.
Only 18 percent of respondents to the national poll said they intend to spend the money they receive later this year from the federal government as part of an effort to inject cash into the sputtering economy. By contrast, 34 percent said they intend to save it and 31 percent intend to use it to pay off debts.
The $100 billion in rebate checks is the centerpiece of a stimulus package passed with fanfare earlier this month as part of an effort to fend off an impending recession. Most single taxpayers who earn no more than $75,000 will get either $600 or a full refund of their 2007 tax paid, whichever is less. Married couples with a combined income of no more than $150,000 and filing a joint return will receive either $1,200 or, if less, a full refund of their 2007 tax paid. Eligible taxpayers also will receive $300 for each child younger than 17 claimed as a dependent.
Jared Bernstein, an economist with the Economic Policy Institute in Washington, said that estimates of the effectiveness of the stimulus package were based on an assumption that Americans would spend at least half the money on new purchases.
“The estimates were all running on the assumption that consumers would spend as freely as they had in the past. I’m pretty sure that’s wrong,” he said.
John Silvia, chief economist for Wachovia Corp., said that analysis of the 2001 tax rebates suggested that about two-thirds of such rebate checks went into new purchases, and that the poll results are “pretty much a flip” of that.
“It looks like you’re going to get a slightly more conservative consumer than you had in the past and you’re going to see less stimulus kick in than you saw in the past,” Silvia said.
The poll, which surveyed 1,408 adults between Feb. 21-25, also found that Americans are deeply pessimistic about the economy. About 71 percent believe the economy is doing badly, and 61 percent believe it is already in a recession.
The poll has a margin of error of plus or minus 3 percentage points.