05.01.2008 — The electronics industry may get a little jolt as a result of tax rebates from the $105.7 billion U.S. economic stimulus package, according to research from Parks Associates.

According to ”Consumer Electronics Purchases: Quarterly Monitor,” 40 percent of consumers in U.S. Internet households will use the tax rebate to purchase consumer electronics products, with many indicating that HDTVs or computers are high on their priority lists.

The idea behind the rebates is to boost the economy through consumer spending, as presented by President Bush and his administration. That spending money is already being distributed.

Payments have been deposited into some direct-deposit tax payers’ accounts already and that phase is scheduled to wrap up by May 16. All remaining payments for tax payers that filed by the April 15 deadline should be mailed out by July 11.

Looking to cash in, many retailers are running “tax rebate sales” and promotions. Wal-Mart, for instance, is offering to cash the checks for free in conjunction with price-cuts.

The rub for the retailer is that consumers can then take their cash and spend it elsewhere.

Consumers that spend their full rebate check at Sears or Kmart will get an extra 10 percent off for a limited time. Target and Best Buy, meanwhile, don’t seem to be doing any promotions that are specifically tax rebate related.

While there’s probably no harm in trying to cash in on the $43 billion that the National Retail Federation estimates that consumers will spend from tax rebates, retailers have their work cut out for them. Only 18 percent of Americans that expect a rebate plan to spend it, according to a CBS News/New York Times poll conducted prior to the initial direct deposits.

Half plan to pay bills and 27 percent intend to save or invest it.

Parks Associates points out that economic concerns will probably curb spending of tax rebates. It adds, though, that those who spend seem more likely to splurge on electronics than to buy groceries.

The report states that consumers will “limit spending in other areas before cutting home communication and entertainment” investments.

“Consumer sentiment regarding consumer electronics purchases is quite mixed,” says Kurt Scherf, vice president and principal analyst, Parks Associates.

“The tax rebate checks will certainly be a boon for some sales, but we are starting to see more pronounced signs of spending restraint among consumers as they feel more uncertainty about the country’s economic outlook.”

It’s important to note that the 40 percent of those receiving tax rebates that Parks predicts will spend on consumer electronics is only among folks living in “Internet households”—not 40 percent of all.

About 75 percent of North American homes have some kind of Internet connection, according to a research by the Fiber-to-the-Home Council, the Telecommunications Industry Association and RVA Market Research.

Forty percent of approximately 75 percent of the country is still a lot of potential customers. To get their business, however, retailers will have to compete with those consumers’ economic concerns.

Parks seems to be saying that consumer electronic retailers should be optimistic—but also realistic.

“Purchase intentions for high-definition televisions and personal computers are high—both overall and specifically with the tax rebate checks—but purchases of these bigger-ticket items will be sacrificed first if the economy sours further,” Scherf says.

“Less likely to be cut are purchases of mobile and personal electronics, such as game consoles, GPS devices, and portable media players.”