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Economic stimulus payment to infuse region with millions of dollars. Consumers in the Spokane-Coeur d’Alene area will receive roughly $110 million in economic stimulus payments in coming weeks. In theory, it’s a stimulating notion for local retailers, the hospitality industry and any other business at which people spend discretionary income. Local business-owners and economists, however, have varying opinions on its potential impact, locally and nationally.
President Bush signed into law earlier this year the Economic Stimulus Act of 2008 in an effort to spur the economy and stave off—or shorten—a national recession. As a result, households that filed a 2007 federal tax return will receive a check between mid-May and mid-July. A typical individual will receive $600, and married couples are due to receive $1,200. Families also will get $300 for every child under the age of 17.Heather Hanley, owner of The Tin Roof furniture and home décor store, says a lot of customers have said they’re holding off on buying items until they receive their “George Bush checks,” as she’s heard them called. “People are going to buy things perhaps they wouldn’t have purchased or maybe spend more than they were going to,” Hanley says. She says, however, she’s not projecting an enormous boost in business, and she isn’t altering her marketing plan or staffing levels at this stage. Scott Sloan, president of Market Vision advertising agency, says many of the company’s clients are ramping up advertising efforts in May because of a number of factors. The economic-stimulus money is one reason, but some also are anticipating pent-up consumer demand after an unusually harsh winter. Also, May has five Saturdays, which gives retailers more opportunities to generate foot traffic. Sloan says many companies’ sales were down in the first quarter of this year compared with the first quarter of 2007. “May is projected to offset losses from the first quarter,” he says. “We’re being a little more aggressive.” When factoring in the other favorable conditions Sloan cites, the impact of the economic-stimulus payments could be greater this year than in 2001, the last time the federal government sent out economic-stimulus checks. That time, Sloan says, “It wasn’t as big as we hoped, but it added 5 percent to the bottom line of most companies, in the generic.” Grant Forsyth, an associate professor of economics at Eastern Washington University, says that in 2001, there was more financial uncertainty than there is now. The current financial crisis is similar to the dot-com bust that caused the economic downturn seven years ago, but “we’re absent the terrorism shock (of Sept. 11) that would act as a continuing destabilizing force,” he says. In economists’ circles, though, there’s some uncertainty about how far the pending cash infusion will go toward stimulating the economy. If consumers are worried about the state of the economy, they might put the money into savings or use it to pay down debt. If that happens on a large scale, Forsyth says, the benefit to the economy won’t be as strong. Randy Barcus, chief economist at Spokane-based Avista Corp., says most consumers are more likely to spend the money than put it toward existing debt or into savings. “The money likely will be spent the same way discretionary income is usually spent, which is on a variety of things,” Barcus says. When consumers spend the money, it becomes someone else’s income, and the money is circulated throughout the economy again and again. “It will have a positive impact on the GDP (gross domestic product) in the third and fourth quarters of 2008,” Barcus says. The jury is out, though, on whether the cash infusion from the economic-stimulus payments will kick-start economic growth or if it will postpone economic stagnation or a recession to the first part of 2009. Economists’ opinions are split on which scenario will play out, he says. Forsyth says there still are some positive economic factors that bode well for the Inland Northwest. Unemployment figures have crept upward, but in general, jobless rates are still relatively low. In the Spokane area, the preliminary unemployment rate for February was 6.4 percent, up from an unemployment rate of 5.8 percent in the year-earlier period. In Kootenai County, the preliminary unemployment rate for February was 5 percent, up from 4.6 percent a year earlier. Also, economies outside of the U.S. continue to grow, which benefits many of the export industries in Washington state, aerospace and agriculture among them. “The current recession is focused in certain regions, and right now, that’s not the Northwest,” Forsyth says.
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