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Wall Street’s eyes on tax rebates
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NEW YORK - With millions of stimulus checks going out to taxpayers, Wall Street wants to know where that money will be spent — and this week’s data could help investors gauge the mindset of the average consumer.
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Tax rebates have historically been helpful in boosting the economy, but they only really work if they’re used to buy goods and services. With many consumers weighed down by debt and saving up to keep up with the cost of basic necessities, some market experts are concerned that what’s best for most individuals — saving their rebates — might not end up helping the broader economy.
Whether the average consumer feels financially healthy could determine whether the economy gets that late-2008 lift that so many investors have been betting on.
On Tuesday, the Commerce Department reports on retail sales in April. Economists surveyed by Thomson Financial/IFR estimated, on average, that sales dipped by 0.1 percent last month after growing by 0.2 percent in March.
Also this week, several big retailers — Wal-Mart Stores, Macy’s, JCPenney Co. and Kohls Corp. — will release their first-quarter results, along with outlooks for later in the year.
After seeing last week’s batch of mixed April sales figures from individual retailers, Wall Street knows that spending remains weak, but investors want more information. Retailers have made clear that consumers are changing their spending habits to accommodate the rising cost of energy and food, but no one knows how long these conditions will last.
Investors will learn more about the inflation consumers face when the Labor Department releases its consumer price index on Wednesday. The index is expected to have risen by 0.3 percent in April.
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