WASHINGTON — Discount retailers said that the economic-stimulus package signed into law last week by President Bush should promote more spending in their stores.
The $152 billion stimulus package includes both tax rebates for consumers and incentives for businesses to invest. Individual consumers, who are expected to begin receiving rebate checks in May, can get up to $600, and married couples can receive $1,200, plus additional rebates for dependent children.
Speaking at a Deutsche Bank investment conference, Howard Levine, chairman and chief executive officer of Matthews, N.C.-based Family Dollar Stores, said the company's core customers have been under pressure for years.
“Having something like a stimulus package out there will only help us,” he said. “While it may be a short-term thing, when you hear about the kinds of challenges our customer is facing, any kind of money is going to a big benefit.”
In a prepared statement, Wal-Mart Stores, Bentonville, Ark., said it “applauds the President and Congress for recognizing the struggles of everyday Americans.”
Although Food Marketing Institute, Alexandria, Va., had sought to have the stimulus package include an expansion of unemployment benefits and additional funding for food stamps, which in the end it did not, Tim Hammonds, president and CEO, said the package would still be a boon to the group's members.
“This stimulus package will benefit food retailers, especially smaller ones, who are expanding job-rich prepared-food departments, health and wellness programs and other consumer services to compete more effectively,” he said.
In addition to the consumer tax rebates, the package also doubles the deduction businesses can take for new assets, to $250,000, and provides a 50% increase in first-year depreciation for investments in property, including computer software, FMI said.
According to a National Retail Federation survey conducted by BIGresearch, consumers plan to spend 40.6% of the tax rebate checks.
The survey found that about 9% of consumers anticipated they would spend the money on necessities such as groceries. Of those earning less than $50,000 annually, 11.2% said they would spend the money on necessities, vs. only 6.2% of those earning $50,000 or more.