Rent-to-own News - Rebate checks could spur $5 billion in electronics spending

This month the federal government began releasing approximately $112 billion to U.S. households as part of a larger economic stimulus package meant to bolster a flagging economy by increasing consumer spending.

While speculation on what if any significant impact the package will have on the economy as a whole continues to rage, a recent study by the Consumer Electronics Association indicates a good portion of the rebates could be headed for new and used computers, TV's, digital cameras and other electronic gizmos.

According to findings in the study, consumers intend to use approximately 50 percent of the aggregate 112 billion for savings, paying down debts and on donations. That leaves roughly 50 percent of the total tax rebate to be actually spent.

The average rebate is estimated at $965, and 4.4 percent of households plan to spend that money on consumer electronics, according to the study -- a figure that represents approximately $5 billion.

"Despite uncertainties in the macroeconomic environment," said CEA Economist Shawn DuBravac, "this new research, coupled with shipment data for key categories like flat-panel TVs, suggests technology remains essential to consumers. In fact, shipments for flat-panel TVs are up 30 percent in the first two months of the year - a phenomenal amount. The outlook is bright indeed for our industry."

Approximately $48.7 billion worth of the rebates will go to households in the rent-to-own income demographic of $50,000 per year or less, according to data from the CEA study.

Of the $5 billion consumers plan to spend on electronics, over 50 percent plan to spend money on computers, with around 38 percent using their rebates on TV's followed by mobile phones, digital media players, digital cameras and video games, according to the report.
 

The breakdown of consumer electronics spending came as a bit of a surprise to Jay Nardone, vice president of sales for electronic distributor ArchBrook Laguna's RTO division.

ArchBrook Laguna is a name brand consumer electronics distributor for the wholesale, retail and rental markets.

Though Nardone said he is already beginning to see the economic impact of the rebates -- approximately 5 percent of studied households said they would spend their rebates before they were received and reimburse themselves later -- he thinks the current TV craze could give computer sales a run for the money.

"It think it's going to impact TV's more than computers for the rent-to-own industry," Nardone said, "People who are going to spend this money are going to spend it immediately. A lot of it has to do with the timing and that computer sales generally slow down over the summer and TV sales pick up. There's just so much value in upgrading your TV right now, that's where the growth is."

Furthermore, the study indicates 60 percent of recipients who plan to spend their rebate checks will do so within the first two months of receiving the money, another factor that bodes well for the rent-to-own industry.

"Tax return time is already a boost for rent-to-own every year," said APRO Public Affairs Director Richard May, "With the addition of the rebate checks, people will have and want to spend this money in a relatively short time frame and dealers will see even more of an impact."

mevans@rtohq.org