Deutsche Bank says that rebate checks, which spurred retail sales this spring, kept the economy chugging along above recessionary levels in Q2. DB:
According to data collected from the Treasury Department, about $63B of the household rebates have already been distributed. The Treasury Department conducted electronic distributions in early May and then by mid-month began mailing out printed checks. The quick distribution resulted in an early surge in spending. In fact, May retail sales were much better than expected. All of the major categories registered increases with the exception of miscellaneous retailers. This led us to mark-up our Q2 GDP forecast from -0.8% to +1.0%…
But don’t pop the Dom Perignon yet. The effects are likely to be temporary and the aggregate affect of the rebates is likely to be close to meaningless:
we merely pulled some of the anticipated spending surge in Q3 into Q2, we lowered our Q3 GDP forecast to 1.5% from 2.6%. It is important to note that the impact on our full year GDP forecast was virtually negligible (+0.8% q4/q4 vs. +0.7% previously).