Tax Rebates: Are Consumers Spending or Saving?

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Critics were skeptical of President Bush's plan to distribute rebate checks to taxpayers in hopes of stimulating the economy. It's been almost two months since the first checks were processed. Are Americans spending the money?

Co-host Steve Inskeep talks with David Wessel, economics editor of the Wall Street Journal, to find out whether the rebates are making a difference in the economy.

"The early evidence is actually that people are spending this money at the store," Wessel says. "Wal-Mart reported that it had cashed $350 million worth of these rebate checks and that had boosted its sales in May. The government's retail sales numbers for May showed a surprisingly large increase given the rest of the economy, and that's also being attributed to consumers spending this money."

Wal-Mart offered to cash the rebate checks without charging a fee.

The checks have helped offset the increased cost of gasoline for a lot of families, Wessel says, but they won't be enough to prevent a recession. And consumer confidence levels remain as low as they've been in 20 years, he says.



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