Monday, February 4, 2008

Majority of Americans Won't Spend Rebate Checks, Survey Says

By Bob Willis

Feb. 4 (Bloomberg) -- Almost two out of every three Americans won't spend tax rebates included in the proposed government stimulus package, a survey by American Century Investments found.

A little more than a quarter of respondents said they would spend the rebate money now, while 36 percent said they would use it to pay off outstanding loans or credit card balances, according to Kansas City-based American Century Investments. Another 25 percent said they would save or invest it.

``There are people out there who recognize the value of socking away even a small amount of unexpected money,'' Jeff Benton, senior vice president for direct sales and service with American Century Investments of Kansas City, Missouri, said in a statement. ``A tax rebate check might just be the catalyst some people need to start saving.''

The survey calls into question whether the government's proposed plan, which would send checks to about 111 million Americans, will do as intended: avert a recession by boosting spending. The proposals would also expand investment tax breaks for businesses.

The Federal Reserve has cut its benchmark lending rate by 1.25 percentage points to 3 percent in two moves in as many weeks last month to boost confidence in financial markets and spur lending and spending.

The economy slowed to a 0.6 percent pace in the fourth quarter of 2007 from an average 4.4 percent rate in the prior six months. Employers cut payrolls in January for the first time since August 2003, the government reported last week, raising concerns the economy was on the brink of recession.

Gender Difference

The poll found that 31 percent of men surveyed would spend the rebate, versus 22 percent of women. Forty-two percent of women were more likely to use the money to pay off debt, according to the survey.

The online survey of 1,500 adults aged 18 or older was conducted in the week beginning January 28 by eRewards Market Research on behalf of American Century Investments. The survey had a margin of error of plus or minus 3 percent.

American Century Investments manages about $95 billion in mutual funds, institutional accounts and trusts, the company said.

President George W. Bush on Jan. 19 said the stimulus plan must be quick, temporary and built on ``broad-based tax relief that will directly affect economic growth.''

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