MADISON, Wis. (5/23/08)--The reaction of consumers to the federal tax rebates--along with a decline in interest rates--could help jump start an economic rebound, Mike Schenk, vice president of economics and statistics with the Credit Union National Association, told Investor's Business Daily Wednesday.
The Fed expects the economy to shrink in the first half of 2008, and then start to recover as interest rate cuts and the $168 billion government stimulus plan begins to take effect, the newspaper said.
"If consumers respond aggressively to this fiscal stimulus, the combination of this and very low interest rates" could cause the economy to rebound strongly and fuel inflation, Schenk told the paper.
However, with oil prices continuing to climb since President Bush signed the stimulus bill, Americans may be spending a good portion of their tax rebates putting fuel into their vehicles, the paper said.
courtesy of cuna.org