Retailers, consumers and prices
Around this time last year, stimulus checks amounting to more than $100 billion started landing in cash-strapped consumers’ bank accounts, giving them a chance to spend and boosting sales for many retailers.
But this year’s stimulus entails lower withholding taxes and not ”hard checks,” which means “the effects of this year’s stimulus on retailers will be a far cry from 2008,” Pali Capital analyst Stacey Widlitz said in a research note to clients.
As retailers already face thrifty consumers, tough comparisons versus a year ago could put some retailers at risk this time around, adding “insult to injury,” she said.
For example, electronics retailer RadioShack offered consumers a 10 percent discount on purchases over $50 when a stimulus check was used between May 4 and July 12 last year. That along with sales of TV converter boxes helped sales, Widlitz said.
The U.S. government’s $787 billion emergency economic stimulus, passed into law in February, aims to create or protect up to 3.5 million jobs while putting more money in consumers’ hands in the hope that they will spend it and boost the economy.
What’s one way to get reluctant shoppers back into the stores? Give them a sales tax holiday — or two or three.
That’s what the National Retail Federation is urging the government to consider as part of the economic stimulus plan being debated in Washington.