Staff and wire reports
Many Americans allowed themselves to fantasize about large-screen TVs, bigger vacations and other luxuries when they learned of the federal rebates they’d be getting this spring and early summer.
Or maybe they’d pay off a credit card or set the rebate aside for a big purchase in the future, notwithstanding Washington’s intentions that they pump it immediately into the lagging economy.
But reality has interfered, in the form of ever-climbing food bills and $4-a-gallon gasoline. While some consumers got their dream TVs, as confirmed by a spike in April retail sales in anticipation of the economic stimulus payments, day-to-day living costs have sopped up the checks for many other early recipients and spoiled their rebate fantasies.
Chad Dunn, manager of Townecrier, a home and car entertainment store, said they have not seen a large amount of new business related to stimulus checks.
“I believe it is all going to gas,” Dunn said.
Sarah Nielsen, an employee for The Cash Store, said they have received a number of calls from residents who wanted to take out a loan using their stimulus check as collateral. She said her company does not make those kinds of loans.
On a personal level, Nielsen said she spent her $1,200 rebate on responsible items.
“My car gets terrible gas mileage, so I used $1,000 on a down payment for a car with better gas mileage. The other $200 had to go to bills,” Nielsen said.
For Clovis resident Jenifer Crockett, the stimulus check will mean much-needed vehicle repairs.
“I haven’t gotten mine yet, but when I do I’ll fix it,” Crockett said pointing to her car parked nearby.
Socorro Hernandez said his plans for the rebate haven’t changed.
“It’s free so I’m going to spend it like crazy,” the 24-year-old Clovis man said. “I’m going to get out of Clovis with it.”
Meb Bolin of Portales doesn’t see an immediate need to spend it.
“I have gotten it, just this last week (as a) matter fact,” Bolin said. “As to how I’m going to use it, it will just go into the banking account until needed.”
The payments started showing up in bank accounts in significant numbers in May.
All told, 131 million households are to receive a total of $110 billion by the time the last payments are doled out in mid-July.
Most individual taxpayers are getting checks of up to $600, while couples receive $1,200 plus $300 for each eligible child under 17.
What people do with them will help shape the direction of the sputtering economy.
Gas prices are up more than 30 percent since the rebate check amounts were first announced and food prices are projected to increase 5 percent or more in 2008.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank, thinks at least half the rebate money may go toward energy costs alone.
“It’s not going to give you the bang for the buck as originally envisioned,” he said. “The odds of it having a longer-lasting impact on the economy are less. … People were not planning to use so much of it on energy and food.”
– CNJ staff writers Liliana Castillo and Keely McDowell contributed to this report.