How WNYers are using stimulus checks
Some are splurging — but most seem to be buying necessities and saving for a rainy day
Before their federal economic stimulus check arrived, Marge Hughes and her husband Ronald planned to get ahead by plugging away at a few additional car payments.
But then they got tired of waiting for a new TV.
Once the retired Tonawanda couple’s check came in May, they used it, along with another $1,000 of their own money, to buy 19-inch and 32- inch Samsung televisions.
“We did our bit [for the economy],” Hughes said. “We were being extravagant, but so what? You only live once.”
When the Internal Revenue Service began mailing out federal economic stimulus checks a month ago, it hoped the influx of cash — $110 billion nationwide — would prop up the struggling economy.
The checks, a minimum of $300 per person and up to $1,200 per couple with another $300 per each child under age 17, went to low-and middle- income tax filers grossing less than $75,000 in income singly or $150,000 jointly.
Many consumers said their checks were destined for a savings account or to pay off debt. Still, economists predicted that consumers, like Hughes, would turn around and splurge once they had cash in hand.
So, has the federally earmarked money been spent on luxury goods the way the government intended? It depends who you ask.
Marian Rufus, 64, a retired phone company representative, passed over replacing a family room DVD player and went on a shopping spree for clothing and jewelry instead.
“I said, ‘This is supposed to be for me, not family!’ ” Rufus joked. “And that’s exactly what I did. No bills, no nothing. Just me.”
Sales are up at Rosa’s Home Store, the local appliances and home furnishings chain, and company President Dean Rallo believes the stimulus checks have everything to do with it. With an “Economic Stimulus Sale” running almost the entire month of May, Rosa’s hoped to cash in by offering consumers a chance to stretch their buck with percentage off sales and other promotions.
The checks, he said, let customers feel better about buying new items they’ve wanted or replacing old items they’ve needed.
Barbara Hairston of Buffalo had been wanting to replace her broken recliner for a year. As soon as she got her $300 check in the mail, she took it and some money from her recent 80th birthday and bought a recliner for $428.
“They say ‘spend it,’ so I’m spending it,” she said.
Consumers felt better about letting go of what they perceived to be “free money,” and Rosa’s — along with the local economy — will feel the benefits of those loosened wallets for a while to come, Rallo said.
“Once the purchase is made, our store employees benefit, our warehouse staff benefits, our whole company feels it,” Rallo said, of the 160-employee company.
Craig Werynski, president of electronics store Stereo Advantage, said his business has spiked, too.
“Customers will comment on it when they make a bigger purchase. They’ll say, ‘The government is paying for this one,’ ” Werynski said. “It makes sense with higher gas prices that consumers would invest in home entertainment.”
As expected, many used their rebate to address debt or invest in home repairs gone neglected because of increasingly tightened budgets.
Amanda Gates, 33, of Clarence used about $500 of her $1,200 stimulus payment for improvements to her mobile home and socked the rest away. Without health insurance, she wants to be prepared for the future.
“We live paycheck to paycheck,” said the retail store manager. “Of course I could use new furniture, new clothes. But [my husband and I] aren’t being frivolous. The repairs are things we’ve been meaning to do.”
One 79-year-old West Side woman, who preferred not to have her name used, would have liked to take her husband out to eat at his favorite restaurant, the Old Country Buffet.
Instead, she put the bulk of her check toward her balance at National Fuel for the $900 monthly heating bills she and her husband racked up over the winter. The rest of the money went toward new flooring, which she installed herself.
“That was a necessity,” she said. “We take care of what we need before we take care of what we want.”
Indeed, despite the government’s intention that stimulus recipients scoop up luxury items and pump life into a sagging economy, Buffalo Niagara residents who actually did so were in the minority.
Instead, most people interviewed either used the money for everyday expenses or indulged themselves in smaller treats.
John Breen, 52, a biomedical technician from North Buffalo, said his stimulus money “came in handy” last month during his daughter’s wedding. He pumped $160 worth of gas into his tank and spent the rest on odds and ends — a tip for the limo driver, a bite to eat.
“It just went into my checking account and back out like any other money,” Breen said. “I didn’t have it pegged for any particular purchase.”
Felicia Graziano, 25, a stay-at- home mom living in North Tonawanda, doled out the first half of her family’s $1,200 check to pay bills. Only then did she splurge on things for herself, her disabled Iraq veteran husband, and their two kids, Drake, 4, and Gavin, 2.
But the word “splurge” doesn’t mean the same thing to her economically squeezed family as it might to others.
“I bought some Pantene Pro-V. I love that stuff but we can never afford it,” Graziano said, of the $4.84 shampoo. “We were like, ‘Oh, my God! We actually have money!’ ”
After giving her grandmother $30 for overnight baby-sitting help and letting each of her sons pick out a toy, the remaining $500 went towards things like clothes, diapers, cat food, a night out at Burger King and a few Blockbuster rentals.
An increase in bargains rather than lavish spending was a trend that bore out across the country. Despite analysts forecasting that increased living costs would absorb much of the stimulus funding and leave retailers in a slump for May, discount stores performed well with modest increases for the month. Wal-Mart Stores sales rose 4.4 percent, and wholesaler Costco was up 9 percent. Predictably, much of the increase was in food and gasoline sales.
Quite a few local consumers, like 29-year-old Elizabeth Wright from Kenmore, stashed their share away as a hedge against an uncertain future. She said there are lots of ways she would have liked to spend her check, but put all $600 of it into her bank account instead.
“It’s not all that much money that makes you feel comfortable enough to invest it in something big like a car or something,” Wright said.
Contrary to the government’s urging, some said stimulus shopping is not an ideal move. According to economist Lawrence Southwick, an associate professor emeritus at the University at Buffalo, hanging onto one’s stimulus payment could be the best move both personally and for the economy as a whole.
“If you put your check in the bank, it’s still stimulating the economy, because now the bank has more money to lend out,” he said. “It’s better, because that money is being invested. And if it’s lent to a company that’s expanding operations, it creates jobs.”
Joseph Kawzlerowski, 43, agrees. Kawzlerowski, who used his money to pay off credit cards, doubts the federal rebates are helping the economy at all.
With gasoline prices up more than 30 percent since the checks were announced and food prices projected to rise five percent more in 2008, he believes the extra funds are just going directly into inflated daily costs of living.
“It’s not stimulating anything. It’s keeping people afloat — for a week,” he said.
