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A new survey conducted for the National Retail Federation (NRF) suggests that compared to just a few months ago, consumers plan to spend most of the government-issued economic stimulus checks on necessities such as food and gasoline, rather than on discretionary products such as furniture, clothing and electronics.

According to the NRF-issued report, "Due to the rising cost of fuel, the largest leap in rebate spending will come at the pump, as 17.2 million people plan to use some of their tax rebate check to pay for gasoline, up from 12.1 million people who planned to do so in February. The rising cost of everyday items like milk, bread and rice also means that more consumers plan to spend the checks on groceries, with 21.2 million people using a portion of the check for food, up from 20.4 million people in February.

"As a result, fewer people plan to spend rebate checks to buy furniture (2.7 million vs. 4.0 million in February), purchase a vehicle (2.4 million vs. 3.2 million in February), or use it for “me” time at a salon or spa (2.9 million vs. 3.5 million in February) … The survey reinforced February estimates on how consumers would spend the $105.7 billion being distributed in tax rebate checks. According to the findings, consumers as a whole plan to spend 39.9 percent of their tax rebate checks, providing a $42.2 billion boost to the economy. Consumers will also use the money to pay down debt ($28.1 billion), save ($20.1 billion), invest ($3.4 billion) and pay medical bills ($4.9 billion)."

KC's View:
In just three months, consumer attitudes toward the economy and their own circumstances have worsened to the point where instead of making discretionary purchases with their government checks, they are now going to use the money to feed their families and fuel their cars.

Probably not exactly what the government had in mind when it decided the checks were a good idea … an idea that always seemed more political than economic in my view. (Not that I'm sending my check back, mind you.)

What worries me is where we are going to be three months from now. In some states, you just know that gasoline is going to be over $4.50 a gallon, and probably heading toward five bucks. You know that food is going to be more expensive, and that consumers are going to be further changing their purchasing decisions and attempting to compensate for the tough times.

And what really worries me is that, best I can tell, the underlying issues aren’t being addressed. People talk about stimulus checks and gas tax holidays, and they'll be talking about other band-aids in three months, especially as the presidential elections draw closer.

But they won't be talking about real and long-term solutions.