IRS data shows tax refunds 10% are lower than last year — giving experts one more reason to expect consumer spending to slow in an economy where recession risk is high
There is also a lag effect in the data. Historical surveying by NRF and others shows that consumers typically wait until they have the refunds in their accounts to spend, and this year, they are filing tax returns later, a likely result of the pandemic pushing out tax season deadlines and creating a lasting behavioral shift.
This year, that's the double whammy: less in refund dollars, and those dollars not going as far for consumers. That's especially true in the food category, where low and moderate income consumers feel the brunt of the pain, even as most goods inflation has declined. His data matches up with the findings from the CNBC survey, with NRF expecting more of the declining refund dollars to be used to pay down debt, especially in light of the fact that Americans have taken on more debt as pandemic stimulus has been depleted. The NRF also is expecting a substantial increase this year in the amount of refund that goes to savings accounts to replenish those depleted funds.
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