Are Those Rebate Checks Helping?

How one website tracks the impact of George Bush's stimulus package.

Buffalo Bills season tickets, Obama campaign donations, cannabis indica, a "mom" tattoo, lottery tickets, two leather-bound bibles, Terminator collectibles, wedding expenses, and a divorce attorney — all purchases people have posted on the website HowISpentMyStimulus.com, exposing what Rudy Adler calls the "idiosyncratic spending habits of the American public."

"My goal was just to capture the stories," explains Adler, a 26-year-old writer/designer based in Brooklyn, who launched the site in early May, around the time direct-deposit filers began receiving their tax rebates. "There was a lot of speculation on where the money was going, and I wanted to devise a method for people to report what they're buying."

As part of the economic stimulus package approved by President Bush in February, the government is handing out $105.7 billion in rebate checks — up to $600 per working individual and $1,200 per married couple, plus $300 per child. As of Friday, almost half the checks had been sent out, pumping taxpayers with nearly $57 billion in added spending power. But it remains to be seen whether this cash flow will trigger an uptick in consumption or just help struggling households break even.

Retailers, of course, hoped the checks would encourage more discretionary spending, but the current economic climate is not geared toward shopping binges. The statistics are bleak across the board. The cost of food has shot up nearly 6 percent since last year; oil is reaching for the sky, causing a rise in energy costs and making gas so expensive that SUV and truck sales are sputtering; the housing market continues to slump under the weight of the subprime mess (first-quarter home prices dropped 14 percent); and May saw the largest one-month surge in unemployment since 1985. To quote John Mellencamp, "It's hard times for an honest man."

During a downturn, every little bit could help. While a survey by the National Retail Federation shows that 40 percent of people are planning to spend their rebates, most are plotting a practical strategy, skipping Wii splurges in favor of necessities.

"In February, 5 percent of consumers said they would purchase gas with their rebate checks," says NRF spokesperson Kathy Grannis. "In May that increased to 7.6 percent of consumers. The difference between February and May affirmed what the rest of the world knows: that consumers are struggling with basics like gas and food."

With the cost of groceries on the rise, 21.2 million respondents to the survey plan to devote a chunk of the check to food (up from 20.2 million in February). Consumers also plan to spend $28.1 billion to pay down debt and $4.9 million on medical bills. Not exactly fun stuff.

It's also instructive to see what people are not planning to use the money for. According to the NRF, only 2.7 million people plan to purchase furniture (down from 4 million in February) and 2.9 million intend to use part of the money for spa or salon services (versus 3.5 million in February). "Not surprisingly, many people plan on saving the money," says Grannis. "At the end of the year, maybe they will pay off a bunch of bills."

As a result, department stores and apparel chains have not gotten a perceptible sales boost. When asked if she has seen any bump in business over the past month, Lauren Staller, manager of the Something Else clothing stores in Brooklyn, is less than enthused. "No, not really. It's been about the same." For many clothing companies, sales have actually dropped. Limited Brands reported that its same-store sales fell 6 percent in May, American Eagle Outfitters Inc. said sales were down 9 percent from a year ago, and Gap's totals fell 14 percent.

There is a bright spot in this dreary panorama. One retail sector, wholesale, is showing real signs of stimulation, with the clearest beneficiary so far being Wal-Mart and its Sam's Club stores. Wal-Mart Stores Inc. announced last Thursday that same-store sales rose 4.4 percent in May, and it's no coincidence that the megaretailer has cashed $350 million in rebate checks. News of Wal-Mart's strong performance prompted the biggest single-day market gains in months. (Of course, the Dow then took a nosedive on Friday when oil went up $11 per barrel.) Other wholesalers also posted better-than-expected May numbers, especially when fuel sales are factored in, with Costco reporting a 9 percent increase in same-store sales.

The anecdotal evidence on HowISpentMyStimulus.com suggests a similar trend toward pragmatism. Many respondents detail spending on mundane home repairs, medical expenses, property taxes, and past-due credit cards.

"It looks like vehicle, gas, and travel-related expenses are number one," Adler noted on Tuesday, "followed by home-related expenses, and then a combination of buying food and paying off debt." When asked about the tattoos and arcade machines — and the .45 pistol that Chase in Spokane, Washington, purchased to defend himself against "the zombie uprising" — Adler points out, "The things that stand out are kind of the crazier purchases, but for the most part, it's what you would expect."

Liz, 42, a school bus driver in Fort Worth, Texas (pictured with her five children) writes, "What I did with my check was to catch up on my rent. I am still behind a bit, but working my way out." (Generosity also has its place on the site. One commenter responded, "Hello, Liz. If you get this message, send me an e-mail. I'd like to help you catch up on your rent with my stimulus check.")

D.S., 40, a homemaker in Pittsburgh, is less sanguine. "I was hoping to take my daughters to the beach with the stimulus check. Unfortunately, I had a shut off notice for electric, and there were other bills pending...many past due…grocery shopping to be done."

Several users made forward-looking purchases, hoping to stretch the $600 a little further. Brent, a 26-year-old "IT guy" in Houston, writes, "My wife and I both drive large trucks, and the cost of gas is killing us. So we spent our stimulus check on a moped." Julia Davis, 26, of Beltsville, Maryland, says, "I used my stimulus check to supplement my income for 2 weeks while I took a bartending class. I hope it pays itself off soon." Irish M., a 34-year-old in Barre, Vermont, writes, "I spent my check buying materials for a large home garden. Food is just getting too expensive, especially fresh fruit and veggies."

So is the stimulus package working? It depends on your perspective. Big-picture skeptics protest that the budget deficit hit an all-time record high in May. But Adler is more focused on the personal. "It's hard to come to one conclusion," he says, "because the stories are so different. But all the stories that are heartbreaking really show resiliency."

One particularly poignant post (with a postoperative photograph that's not for the faint of heart) comes from Diane Mower, a 30-year-old early childhood educator in Eugene, Oregon. "After having emergency surgery to remove a baseball-sized brain tumor that put me on the edge of death, I spent my stimulus check on medical bills due to the unfortunate fact that I am one of the many uninsured Americans in this country. While it was nice to receive the money, I do not believe that this is an appropriate solution to our country's rising economic crisis."

When asked about the tenor of the political commentary on the site — one person bought a "George W. Bush Memorial Dyson" that will "suck as hard and for as long as this administration" — Adler admits that he wishes people would leave politics out of it. "You'll notice that a lot of people attack Bush," he says, "but you also get the sense that they're really happy to have the money."

Obama, too, must have picked up on this appreciation — or relief. Regardless of whether the stimulus package can be labeled a success, the Democratic presidential candidate announced on Monday that he will push a second round of rebates next year.

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