Shoppers will likely spend tax rebates on necessities

Alas for merchants, "shop till you drop" may not be the mantra for many consumers after they receive their tax rebates, a survey released today suggests.

Discounts are rampant as retailers look to entice consumers to spend the tax rebates that result from a federal economic stimulus package; stores had hoped that consumers would spend a portion of that money on such discretionary items as big-screen TVs or a new spring wardrobe.

But a survey out today from the National Retail Federation offered a more sobering view: A big chunk of the tax rebates could go to paying for necessities such as gas and groceries as many consumers cope with rising prices.

Consumers still plan to spend about forty percent of their tax rebate checks, sending $42 billion back into the economy, but what they plan to buy has shifted slightly from February when the federation conducted an earlier survey, the retailers group said.

Because of the increasing prices of gas and groceries, consumers now plan to spend more of their rebate checks on necessities like gas and food rather than on discretionary items like electronics and apparel, the federation said.
(By Chris Reidy, Globe staff)