WASHINGTON—When President George W. Bush recently passed a $168 billion economic stimulus package comprised of taxpayer rebates and business tax breaks, he said it was designed to “provide a booster shot for our economy…and put money back into the hands for American workers and businesses.”

The White House says that the stimulus will offer individual tax relief up to $600 for individuals and $1,200 for married couples (with additional rebates for children) and provide temporary tax incentives for businesses to make investments in their companies to spur new job creation.

While it may be a good first step to get the U.S. economy back on its feet, the potential for the stimulus to be more than just a short-term fix is yet to be determined, according to various logistics and transportation sources.

For the economic stimulus to have a meaningful impact on the U.S. economy, a good chunk of the money needs to be spent by consumers. If this is indeed what happens once the checks start being cut, there could be a meaningful trickle-down effect for both shippers and transportation services providers, says Rick Jordon, director of global logistics services for ICG Commerce. “If consumers do spend their rebates and the money goes back into the economy, it will undoubtedly impact transportation and logistics,” noted Jordon.

One reason for this, he explained, is that retail inventories and manufacturing output have both dropped, with companies chipping away at existing product levels and retailers carrying as little inventory as possible. He added that inventories will remain low until consumers get the rebate money in their hands, at which point manufacturing output may increase as a result of increased spending.

While the stimulus is likely to provide an uptick in consumer spending, it may ultimately result in “incremental freight demand” which would be fairly short-lived, according to John G. Larkin, managing director at Stifel Nicolaus Transportation and Logistics Group. Shippers, said Larkin, should be adequately prepared for any increase in consumer spending whenever it eventually happens.

“There might be a return from [these current] depressed levels to normal levels for a brief period, which may result in shippers slightly increasing their production levels and putting more inventory in place,” he said. “And they will have enough advanced warning in regards to planning specifics to get things finalized ahead of time.”

In terms of the potential the stimulus has to provide businesses with tax incentives to spur job growth, the public will need to wait and see. Before President Bush signed off on the package, House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) proposed a $15 billion package as part of the stimulus package that would have created approximately 751,000 jobs on various highways, rail, and transit infrastructure projects.

Jim Berard, House Transportation and Infrastructure Committee spokesperson, said that he is optimistic Oberstar’s proposal may be included in “Part 2” of the stimulus package. Berard told Logistics Management that allocating sufficient funding for transportation infrastructure initiatives is as crucial to helping the economy rebound as taxpayer rebates.

“You can only do so much by sending people checks,” said Berard. There is a need to get people to buy things, but we also have to start making things and getting people back to work.”

Stifel’s Larkin supported the concept of stimulus funding going towards infrastructure improvements, noting that it has been widely forecasted that freight volumes will eventually rebound.