Federal tax refunds paid through Feb. 3 were down $45.4 billion from taxes paid through Feb. 5, 2016, the Wall Street Journal reported, with the average refund also declining, from $3,385 to $1,994.
That drop, along with some taxpayers who won’t receive their reimbursements until at least Feb. 15 due to a new law passed two years ago, might delay consumer spending.
Congress passed a law in 2015 to postpone refunds typically paid early in the filing season to reduce cases of tax fraud, so someone claiming an earned-income tax credit or child tax credit might not see their reimbursements until later than usual.
"Some of the spending that would have happened a little bit sooner, it will happen a little bit later," Chris Christopher, the director of consumer economics at IHS Global Insight, told the WSJ.
Consumer spending could be affected by as much as $21 billion this month, reports Bloomberg News.
"Just two weeks into the tax filing season, tax return statistics from the IRS and U.S. Treasury are already showing a meaningful slowdown," wrote economist Spencer Hill in a Feb. 8 note to clients. "Because a significant portion of households spend their income almost immediately — due to credit constraints or other factors — the refund delay could result in a pothole in consumer spending in February."