There’s talk of an economic stimulus package  that may involve some funds going back to low and middle income Americans in the hopes that they’ll spend it, boost the economy, and make everyone who watches stock tickers sleep a little easier at night. Matt Lauer interviewed Henry Paulson, the US Treasury Secretary, on the Today show and discussed the potential stimulus package and brought up a very good point. He brought up a quote in the Wall Street Journal about how the last time this tactic was tried, back in 2001, many low and middle income Americans saved their check from the government and didn’t spend it. (wsj blog article discussing this idea )
That’s what people do, they spend in times of prosperity and save in times of crisis. With the stock market taking a pounding, with the billions in bank write offs, with the sub-prime news, and all the talk of a recession – whether we’re actually in a time of economic crisis or not, people think we’re in a time of economic crisis so I’m inclined to believe they’ll save any money the government decides to dole out.
(As an aside, I love how we’re always going back to Reaganomics  and supply-side economics, which was really the last time we truly battle a long period of economic slowdowns, in that case it was stagflation caused in part by oil prices. Tax cuts plus deficit spending… how much longer can we be ripping the golden eggs out of the golden goose before the poor thing dies and China stops buying T-bills?)
So my question to you is, if you got money as a result of the stimulus package, would you spend it or save it?