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  • Apr 28, 2008 3:11 pm US/Pacific
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Could Rebate Checks Lead To Higher Prices?

 QUESTION:  The federal tax rebate checks are designed to help get the economy head quicker in the right direction, but won't increased consumer spending push the prices of goods higher causing more problems for Americans? 

ANSWER:  The answer to your question might be yes, if the economy were growing nicely, and if individuals were already spending a high percentage of their pay checks on goods and services.  However, the economy in the first quarter grew at an annual rate of .6% which is anemic at best.  Furthermore, due to a number of factors including higher transportation costs, higher food costs, and higher housing costs, discretionary spending on other goods and services has slowed.  It is growth in this area that the government is hoping to stimulate.
 
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