Thursday, February 7

Bush's big gift to Wal-Mart - MSN Money

In this post, Michael Brush talks about how you might spend the money that you might get in the mail. He thinks that this stimulus package will be like a windfall for retailers like Wal-Mart.

I still believe that most people will use any money that they get to pay off some of their accumulated revolving debt, as I wrote about in this post.

If people do go on a buying spree, it could have the effect of stimulating the economy. If a TV is sold, then another will be manufactured. Another person in the chain gets their paycheck, spends it, and the beat goes on (dada da da dada) and the beat goes on! We call this the 'mulitplier effect'.

The multiplier effect -- money spent that gets spent again -- means the ultimate impact on the economy would be bigger than $100 billion. Chris Varvares, the president of Macroeconomic Advisers, thinks each rebate dollar spent would increase growth by $2.

The rebates and recent Federal Reserve interest-rate cuts "should keep the consumer spending right through the spring and into the summer," says economist Ed Yardeni, the president of Yardeni Research. "I'm sure marketing departments are already coming up with ways to get those rebate checks spent in their stores."

Bush's big gift to Wal-Mart - MSN Money

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