Rather than the gluttonous splurge on flat-screen TVs and foreign vacations that Uncle Sam had envisioned, most Americans are plunking their rebate checks down on exorbitant gas and food costs--and their mounting debt. “The initial sense is that people are not running out the malls,” one economist told the New York Times. The sense of restraint may fail to buoy the economy as hoped.
In the last six weeks, the government has handed out more than $50 billion in tax rebates, but retail sales saw an uptick in only one of those weeks. “The way the economy is going, people are too scared to spend,” says one salesman who paid his entire $1,033 rebate to his mortgage company. In one survey, 51% of respondents planned to put part of their rebate toward debt.