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A new study by TNS Retail Forward estimates that households will spend as much as $42 billion—of the $105.7 billion tax rebate total—at retail stores from May through the end of the year, with most of the incremental retail spending occurring in the third quarter.

According to the report, year-to-year growth for the second quarter growth is forecast at 3.5% with the tax rebates instead of 2.0% without the rebate impact. Third quarter growth is forecast at 6.0% instead of 3.0% without the tax rebate impact. The sales forecast is of retail sales excluding autos and gasoline as reported by the U.S. Department of Commerce."

The study also suggests that "down-market to mid-market shoppers, who are most likely to receive and spend a tax rebate, will remain focused on value and everyday purchases. Mid-to-up-market households will be more inclined to make big ticket purchases, which will likely benefit sales of consumer electronics and some home furnishings."

And, while a combined 41% of survey respondents tell TNS Retail Forward that they intend "to use their rebate check for either everyday living expenses or to make a special purchase … More households are expected to use the rebate to pay down debts, among other things."

KC's View:
It is worth pointing out that the economists at Retail Forward believe that while these checks will have a short-term impact on retailers' bottom line, they also think that it is unlikely that they will have any sort of sustained positive impact on the economy.

Which is not exactly what I wanted to hear.