Fast payment, it has been said, makes fast friends. As part of its campaign to convince taxpayers that it's become a kinder and gentler agency, the Internal Revenue Service has been promoting its electronic filing alternative. In nationwide media spots, the IRS offers to cut in half the average waiting time for tax refunds for those who "e-file," and promises even speedier service for direct deposit participants.
The IRS plan is working. As this issue went to press, taxpayers who filed well in advance of the April 15 deadline had already been issued some $50 billion in refunds, 20 percent more than at this time a year ago. Two-thirds of that increase is due to the fact that the average refund is up about 14 percent, to $1,800 per filer. And the number of refunds processed to date is up by 6 percent over last year, due largely to the increasing popularity of electronic filing.
Of course, tax advisors might suggest fewer withholdings for taxpayers anticipating a refund. But it appears that many Americans prefer the forced savings of over-withholding (despite the fact that this is equivalent to giving an interest-free loan to the government) and treat their ritual springtime refund as if it were found money. It's expected that the lion's share of this year's total refund pie of some $125 billion will fuel purchases of discretionary items, from appliances to vacations.
Recent trends in appliance shipments have been resilient due to low interest rates, high consumer confidence, and improving demographics. For both newly constructed and renovated homes, the tendency toward smaller families is not resulting in smaller homes, but fewer bedrooms and larger living areas (read "more appliances"). Traditionally, major appliances have been replaced when they've worn out, or during extensive remodeling. But now, for some products-refrigerators and washing machines, for example-new features and improved efficiency are stoking demand.
Maytag, one of our Consumer SentiMeter index components, has profited from these trends, and has seen its stock triple during the past two years. Its recent acquisition of Jade Range, a maker of premium indoor and outdoor stoves, "is one more strategic step to invest in high-end brands and complementary product lines," according to Leonard A. Hadley, Maytag chairman and CEO.
Refund checks are not only being tagged for home improvement purchases. Spending on leisure and vacation, a necessary complement to productive employment, is also booming. It should be no surprise that the Internet is making its presence felt here-by helping consumers to be more productive when selecting their vacation destinations.
The Travel Company, an agency specializing in leisure destinations and cruises, boasts that its Web site (www.travelco.com) receives over 50,000 unique visitors each week. Complete vacation descriptions-including critical reviews-allow Web surfers to choose a cruise with the right balance of features and cost, and the Travel Company's cumulative revenues from bookings this year are running 30 percent higher than in 1998. Cruise operator Carnival, another SentiMeter index company, celebrated its busiest bookings day ever on February 8. While we can't say for sure, it's possible that some weary Washington lawyers are partly responsible for the boost -eagerly anticipating a long, relaxing cruise after the end of the Lewinsky saga.