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To: ldo79 who wrote (362008)	3/13/2008 4:24:52 PM
From: Giordano Bruno	Respond to of 436258

Rebate Checks: Straight to the Gas Tank? President Bush, his staff and many lawmakers are counting on rebate checks to boost the ailing economy. For that to happen, they also need to hope higher oil prices don’t wipe out the effect of their $168 billion stimulus package. The rebate checks to 130 million individuals — roughly $112 billion total — start hitting mailboxes in May. The forecasting firm Macroeconomic Advisers, which isn’t (yet) expecting a recession this year, says the stimulus should raise second-quarter economic output by three-quarters of a percentage point and third-quarter growth by 2.5 percentage points. But gas prices also are expected to continue rising as crude oil shoots up (hitting $110 a barrel this week). Deutsche Bank economists estimate that every one-cent increase in gasoline prices lowers real consumer spending by an annualized $1 billion. If the current $3.27 per gallon pre-summer national average ends up being the 2008 average, they note, that’s 43 cents above last year’s average level and a $43 billion reduction in consumer spending. In 2001, roughly one-third of the rebate checks were used for household consumption. A similar trend this time would boost consumer spending by about $37 billion. The result: “the rebate checks (and then some) would be going straight into households’ gas tanks,” the Deutsche Bank economists say in a research note. That won’t bode well for consumer spending. Retail sales fell in February, and could tumble more in the coming months if drivers have to shell out more cash at gas pumps. –Sudeep Reddy