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Consumers still plan to spend about 40 percent of their tax rebate checks -
sending $42 billion back into the economy -- but since February what they plan to buy has shifted slightly in favor of food and fuel, according to the findings of a National Retail Federation survey, conducted by BIGresearch.
Because of the increasing prices of gas and groceries, consumers plan to spend more of their rebate checks on necessities like gas and food, rather than on discretionary items like electronics and apparel, the survey found. Due to the rising cost of fuel, the largest leap in rebate spending will come at the pump, as 17.2 million people plan to use some of their tax rebate check to pay for gasoline, up from 12.1 million people who planned to do so in February. The rising cost of everyday items like milk, bread, and rice also means that more consumers plan to spend the checks on groceries, with 21.2 million people using a portion of the check for food, up from 20.4 million people in February.
As a result, fewer people plan to spend rebate checks to buy furniture (2.7 million vs. 4.0 million in February), purchase a vehicle (2.4 million vs. 3.2 million in February), or use it for "me" time at a salon or spa (2.9 million vs. 3.5 million in February).
The survey reinforced February estimates on how consumers would spend the $105.7 billion being distributed in tax rebate checks. According to the findings, consumers as a whole plan to spend 39.9 percent of their tax rebate checks, providing a $42.2 billion boost to the economy. Consumers will also use the money to pay down debt ($28.1 billion), save ($20.1 billion), invest ($3.4 billion), and pay medical bills ($4.9 billion).
According to the survey, women are more likely to spend and/or save portions of their rebate check, while men are more likely to pay down debt. Young adults 18-24 will spend more of their checks (43.5 percent) than any other age group.
The NRF 2008 Tax Rebates Consumer Intentions and Actions Survey was designed to gauge consumer behavior and shopping trends related to the upcoming tax rebates. The survey, which polled 8,347 consumers, was conducted for NRF by BIGresearch from April 29-May 7. The question asked, "The sending of the economic-stimulus rebate checks/payments began Monday, April 28. What are you planning on doing with the money?" The consumer poll has a margin of error of plus or minus 1.0 percent.