Tax rebates - are they enough to stimulate the economy?
Tiny URL: http://tinyurl.com/6cnpo7
The first rebates from the Bush administration’s economic stimulus package, went out Monday, earlier than previously planned. The rebates will be direct deposited to individual bank accounts. Touted by the Bush administration as a much needed elixir to a “slowing” economy, which many economists think is already in recession, the stimulus package is expected to provide impetus to the economy through increased consumer spending - roughly two thirds of the nations economic activity.
The rebates — up to $600 for an individual, $1,200 for a couple and an additional $300 for each dependent child — are the centerpiece of the government’s $168 billion stimulus package, enacted in February. Roughly 130 million households are expected to get them.
Gas prices at the pump are nearing $4 a gallon and food prices have increased at 5.1% ( compounded annual rate based on 3 months ending March 2008 ). With rising gas and food prices, many argue that the tax rebates will go towards grocery purchases, bill payments and further enriching the already flush pockets of OPEC. OPEC is the Organization of Petroleum Exporting Countries.
Unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm payroll employment continued to trend down (-80,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the past 3 months, payroll employment has declined by 232,000. In March, employment continued to fall in construction, manufacturing, and employment services, while health care, food services, and mining added jobs.
With slowdown in economic activity, financial markets in turmoil, increasing unemployment and rising prices of food and gas, the Bush economic stimulus package seems to be a case of “a bit too little and a bit too late”.
