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Retail sales boost seen from tax rebates 

Columbus, Ohio – Two-fifths of consumers are ready to spend their anticipated federal income tax rebates on either everyday retail expenses or special purchases, amounting to a total of $42 billion pumped into the economy by year end, according to a new poll by research service TNS Retail Forward.

The total tax rebate is projected at $102.7 billion, said TNS, predicting that the main add-on spending will be seen in the third quarter. The rebate boost is seen driving third-quarter retail sales to a 6.0% gain instead of the expected 3.0% rise, while 2Q sales volume is seen bumping up to 3.5% instead of the expected 2.0% rise.

The other uses of the rebate include paying down debt such as credit-card balances and mortgages, building savings or making charitable donations.

Noting that the credit crunch and price inflation will continue to dampen merchandise sales overall, TNS senior economist Frank Badillo urged retailers and suppliers to “maximize their efforts to benefit from the tax rebates because growth prospects otherwise look bleak through the end of the year.”

“TNS Retail Forward expects homegoods sector sales will likely remain weak while discount department stores, supercenters, warehouse clubs and other value-focused retailers will fare best,” the company said.

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