Almost half of Americans who have received tax-rebate cheques have used the money to pay off debt rather than spend it on goods and services. Thirty percent of respondents to a CBS News/MarketWatch survey said they received cheques, and, of those, 46pc said the funds went to pay bills. President Bush had hoped that his tax cuts would boost consumers' disposable income and increase household spending, helping to drive the economic recovery.
Analysts in the US said the survey backs up their analysis that the surge in retail figures in the past two months has been driven by the growing confidence amid the equity market rebound and the better weather, not the tax rebates. The survey supports recent consumer credit reports indicating that US households are becoming more cautious with their cash and are less inclined to take on debt. This may indicate slower consumer spending growth in the months ahead, which would slow the recovery; consumer spending accounts to two thirds of the US economy. //www.fxcentre.com