My hometown newspaper likes to pose a Question of the Week column, wherein six or seven citizens are accosted outside a local business and asked their opinion of current events. This past week the question was "What will you do with your economic stimulus check?" Responses ranged from "new tires for my truck" to "fill my [heating] oil tank" and "pay my mortgage". Nobody said "buy a new TV", "go on vacation", or even "pick up that new Mudcrutch CD". Practicality seems to be winning out over leisure. And though practicality still stimulates the economy, businesses that rely on discretionary spending might not feel as stimulated as they had hoped.
As the checks begin rolling in, retailers are jumping at the chance to take advantage of the windfall by encouraging their customers to come in to the store and turn their checks into merchandise. Walmart will cash checks for free. Sears will give a 10% bonus to customers who cash their check at the store and spend it all there. A regional supermarket chain is giving customers a 10% bonus on every $300 gift card bought with a stimulus check. This exchange of stimulus checks for the ubiquitous gift card reminded me of a conversation I had with a friend during the holidays.
When talk of sending checks out once again began to surface at the end of last year, my friend suggested that instead of doling out checks (and direct-deposit lump sums) which could be used for less stimulating purchases like heating oil, tires, and housing, the government should stimulate the economy with gift cards. Send each potential recipient a letter that either directs them to a website or includes a form for them to complete and mail back, indicating their choice of gift cards from dozens of businesses, in varying denominations up to the total amount of their refund. This would all but force much of the population to get out of the house and use their new-found cash to buy goods and services, as opposed to using it for less stimulating essentials like paying the mortgage, lightening their debt, or keeping the lights on for another month. Of course, the option to receive the cash in check form would be among the options, but what fun would that be? Who wants to face the responsibility of having to decide where the money should be spent, when there are so many options for where the money could be spent?