The Tax Rebate Checks Have Been Spent, Now What?
-- October 31, 2003

Like we said yesterday, Government and Wall Street cheerleaders alike reveled in yesterday's astounding 7.2% GDP figure. While that was a very impressive number indeed, new data released today indicate it's a bit early to pop the cork on the bubbly.

Personal spending decreased by .3% in September, suggesting the consumer, which had been firing from all turrets, is now out of ammo.

Even the government admits that the pickup in the economy was due to the one time tax rebates handed out last quarter. With those checks already spent at Wal-Mart, American consumers are now pairing back their purchasing. Partial data for October already show that auto and chain store sales are sluggish -- pointing to further weakening.

Keep in mind that those tax rebates were not a bonus, they were a loan from Americans' 2003 tax returns. When consumers receive hundreds of dollars less than they expected from Uncle Sam at the end of April, spending could plunge and the 7.2% GDP figure may seem like a fond but distant memory.

related article:
Consumers Pare Spending in September