In the intervening months, I've occasionally seen bits on CNBC and elsewhere on the subject of what-will-people-spend-the-money-on. Surveys in advance of receiving the check consistently showed that people mostly intended to (a) pay current bills with it or (b) save it. Commentators invariably then discounted these results and proceeded to discuss large screen TVs. This was during the time frame that I was questioning R. for wanting a 46" TV, after questioning other friends' decisions to get 46" (or larger) TVs, that ultimately resulted in R. pointedly wanting a 46" TV for his birthday. Which just goes to show how far that strategy gets me.
As more and more surveys indicated people were quite adamant that they were not going to go on some sort of shopping spree with their rebate checks, the commentators got more and more detailed about how people have often said this kind of thing in the past and it turned out not to be true -- still discounting the results of those surveys. Kinda makes you wonder _why_ they were doing the surveys, doesn't it?
Now that the rebate checks have been out and, presumably, burning a hole in shoppers pockets/wallets/whathaveyou, the New York Times has done a piece on What Happened to the Rebate Check.
“The initial sense is that people are not running out to the malls to spend their checks,” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. “It’s not quite proving to be a hot potato that’s burning a hole in people’s pockets.”
Details ensue: people are buying gas, catch up on their mortgage, etc.
Did they conclude, gosh, wow, we might have been wrong, this particular time the stimulus ain't gonna do what we want it to do, etc.? Heck no.
"Economists emphasize that the data remains preliminary, making it too early to assess the effectiveness of the rebates. And those who are paying off bills are potentially clearing the path for more spending later on."
"Most experts assume that over the next six months, Americans will spend somewhere between 20 and 50 percent of their tax rebates, much like the last time the government took out its checkbook in such fashion, in 2001."
To the NYT's credit, they follow up by noting that even if this does happen, the money's all gone in a few months and the end of the year is looking pretty grim. But that's the standard gift of a Republican administration to an incoming Democratic adminstration.
Included in the article: review of the various surveys leading up to this nonsense, comments on the mixed message of we're-in-this-because-you-all-overspent + hey-please-please-please-spend-more. Other sidelights:
“If I spend it, it stimulates the economy,” Mr. Meiklejohn said. “If people go around paying off bills, it’s not going to make any difference.”
I'm not slagging Meiklejohn for spending his check on a 42" inch TV: his kids are grown and married and he has no house or car debt. More power to him; enjoy yourself buddy. But that's a weird sort of policy perspective: paying down debt has no economic merit (I actually understand the case for that statement; I really do.).
I used to have all these arguments about economics with people, and about how stimulus was important and Keynes had it going on and Milton Friedman suffered from criminal doofusness (I didn't use those words). Once in a while I'd even dig in and start pointing out that what has been attributed to Adam Smith, and what he actually wrote bear only a very limited resemblance to each other. I am now giving up. There seems little point in taking one side or the other if this is anyone's idea of a stimulus package, and wonks in high places (government, press or other) persist so strongly in ignoring feedback to the stimulus package.