Say Bye to Stimulus-Check Spending

Well, they’re saying the stimulus checks are all spent.

Though we saw some boosts in July sales, particularly at discounters like Costco and Wal-Mart, apparel and department stores were both hammered by same-store sales plunges. We guess people were a little more interested in necessities than getting the newest handbag.

“The Consumer Is Underwater!”

Howard Davidowitz is one of our favorite people to interview. The retail analyst, who is chairman of NYC-based consulting firm Davidowitz & Associates, is always fun to talk to because of his strong and animated opinions, many of which are too “colorful” to add to a news article.

In this MarketWatch audio clip, he is pretty tame, probably because he knows he’s on radio. But there are still a few things he says that are gems, like: “The consumer is underwater.” And there is also a reference to rebate checks “flying out of helicopters.” Fun aside, Davidowitz’s outlook for the industry is pretty bleak right now.

Forget Paying Debt, Rebates Going to Best Buy

A Standard & Poor’s report (via BusinessWeek) doesn’t have a lot of faith, like many commenters on this blog, in US consumers paying off debt and buying groceries with their rebate checks. It says they are more likely to go on a spending spree at Best Buy…even if some credit card debt gets paid down.

“Americans may say that they are going to save the money or use it to pay down debt, but even those who do pay down their credit card balances are likely to build them back up rapidly, in our opinion,” says David Wyss, S&P’s chief economist.

Retailers Line Up For Rebate Checks

So it’s really starting now. Sears, Kroger and others are vying for the rebate checks the government will issue consumers next month as part of a $168 billion economic stimulus plan to get the economy back on track.

The Kroger plan would allow customers to exchange their rebate checks for gift cards valued higher than the government-issued money. A $300 check would turn into a $330 gift card, $600 would bring in $660 and $1,200 gets the shopper $1,320.

Will Rebate Checks Help Retailers?

A tax rebate this year that President Bush recently approved would put between $600 and $1,200 in the hands of most taxpayers. And according to this article, many retail executives seem to think that this money will potentially end up in their stores.

“Wal-Mart and Circuit City are putting together strategies to draw in customers for what retailers say will be a bigger payoff than Valentine’s Day and Mother’s Day,” the article says. Mike Ullman, the chairman at J. C. Penney, says stores “would obviously compete vigorously” for shares of this money.