President Bush said Friday that the U.S. economy is in a "slowdown" and he encouraged taxpayers to take all necessary steps to receive rebate checks through the federal economic-stimulus plan that he signed into law earlier this year.
The first direct deposits of the federal tax rebates will begin hitting bank accounts on Monday, according to the Internal Revenue Service, and paper checks will be sent starting next month.
The rebates, which will range from $300 for individuals to $1,200 for couples, are the centerpiece of the government's $168 billion stimulus package, enacted in February. Roughly 130 million households are expected to receive them, and lawmakers are hoping the money will give a boost to the weakening economy.
"This money is going to help Americans offset the high prices we're seeing at the gas pump, at the grocery store, and will also give our economy a boost to help us pull out of this economic slowdown," said Bush in brief remarks from the White House.
Many investors on Wall Street have concluded the U.S. economy is already in recession as the national housing market posts its largest price declines on record since the Great Depression. Consumer spending is showing signs of weakness, and credit losses amid a breakdown in the bond markets are piling up on Wall Street as mortgage foreclosures spike.
Furthermore, prices for fuel, food and other commodities are soaring around the world as the
lowers interest rates to stimulate the economy.
The Fed recently had to rescue the nation's fifth-largest investment bank,
( BSC), from bankruptcy and oversee its sale to
Other major financial institutions like
( LEH) and
Bank of America
have also seen their stocks plunge amid heavy writedowns on mortgage-related investments.
Meanwhile, a report released Friday the National Conference of State Legislatures reveals that financial conditions at state governments have become so dire that they appear to be in a recession. By mid-April, 16 states and Puerto Rico were reporting shortfalls in their current budgets as tax revenue plunges. The situation is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year's budgets.
"Whether or not the national economy is in recession -- a subject of ongoing debate -- is almost beside the point for some states," said the report.