By: Riccardo Ronco on Venerdì 05 Ottobre 2001 00:03
Time to put that $300 to good use
Commentary: Recovery is up to the consumer now
By David Callaway, CBS.MarketWatch.com
Last Update: 12:10 AM ET Oct. 4, 2001
SAN FRANCISCO (CBS.MW) - As the death toll from the terrorist attacks mounted, the stock market plunged and America girded itself for war last month, I received something in the mail that I had completely forgotten about: my tax rebate from the IRS.
At the time -- just a week after the Sept. 11 attacks -- I simply threw the $600 check for my wife and me on my desk, figuring I would deposit it in our checking account as soon as I could make it to the bank.
But now, with the economy reeling and Fed Chairman Alan Greenspan almost out of rate-cut bullets, it's become more important than ever that I go out and spend my $300 portion right away.
The Fed's nine cuts in interest rates this year, the most aggressive campaign to make money cheaper since Greenspan took charge in 1987, have brought rates to 40-year lows and laid the groundwork for a massive burst of borrowing and spending when the time is right.
Trouble is, nobody wants to go first. People are afraid, not just of losing their retirement savings in the stock market or losing their jobs in a layoff. People are afraid of dying in the next terrorist attack.
It's understandable. The horrendous attacks on New York and Washington have everybody uncertain about what will happen next. But we're going to have to overcome these fears for this economy to rebound, not to mention our own mental health.
In Washington, a bizarre bipartisan effort to pass an economic stimulus plan -- with Democrats advocating tax cuts and Republicans pushing for more government spending - is beginning to take form. It could be worth up to $75 billion when it's all done and dusted.
This is good. But it should be done quickly before political bickering stalls the process. Greenspan is wrong in his argument that Congress should wait on this plan. He is right in his statement that if a plan is passed it should be a big one, despite the potential impact of more borrowing and spending on long-tern interest rates.
The ideas with the best chance for quick passage include a new round of temporary tax cuts for individuals, investment tax credits for companies to boost corporate spending immediately, and several billion dollars worth of new infrastructure spending on stuff like highways and railway projects. Extending jobless benefits for the unemployed should also be part of the package.
But we need to go further. For the consumer to truly return, we need to go beyond government packages and get right to the heart of what makes Americans love to spend - deals and discounts.
The collapse in travel and tourism since the attacks has created the biggest marketing opportunity in a generation. An offer by Delta Airlines (DAL: news, chart, profile) to give away 10,000 plane tickets to New York City is sheer genius, attracting people back to the skies and helping New York regain tourists at the same time.
We need more ideas like that.
How about adults enter free at Disney (DIS: news, chart, profile) theme parks through the fourth quarter; two for one dining at all restaurants on weeknights; meet your local firemen days at local malls; or a nationwide nickel beer night during game one of the World Series, sponsored by Anheuser-Busch Cos. (BUD: news, chart, profile)? Anything to get people out and about again.
Times are tough. But if we can take some of this patriotic good will we're all feeling and funnel it into some fourth-quarter spending, this economy won't have to languish for several more quarters. We can do something about it now.
As for me, I've got $300 in my pocket and I'm not afraid to use it.
David Callaway is executive editor of CBS.MarketWatch.com.
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IN EUROPA QUESTE COSE NON SI LEGGERANNO MAI.
Si invitano le persone a spendere a piu' non posso come se non avessero il cervello per valutare se e' giusto farlo o meno. C'e' un paternalismo in questo modo di fare che mi lascia senza parole.
Il consumatore americano mi sembra quasi considerato dall'establishment un porchetto all'ingrasso che se mai alzasse la testa dalla mangiatoia per 10 minuti (non fosse per prendere respiro!), mal gliene incolga. Giu' a mangiare di nuovo che il buon fattore perde di produttivita' con i suoi bei prosciutti.