Cash for Clunkers to wrap up today

08.24.09
By Lewis Green

While American consumers have largely kept new buying in check and remained committed to paying off credit card debt, there has been one successful effort to encourage spending: Cash for Clunkers.

But the program - in which car owners can trade in old gas guzzlers for vouchers to spend towards a new car purchase - will end today, the government said.

Consumers receive rebates of between $3,500 and $4,500, depending on how big of a fuel-efficiency difference there is between the old and new cars. The scheme was more popular than anticipated, which means it has run out of money earlier than expected.

As of Friday, car dealers reported they had sold nearly 500,000 vehicles and collected approximately $2 billion in rebates. And auto industry data showed sales increased to an 11.2 million unit annual pace in July, Bloomberg reports.

But, while Cash for Clunkers may have been a lifeline to the auto industry and triggered a wave of consumer spending, are Americans really loosening the purse strings?

Not yet, experts told Bloomberg, explaining that high unemployment and sluggish hiring is holding people back.

"It's hard to see consumer spending driving the economy forward given the losses of wealth that have occurred," Nigel Gault of IHS Global Insight told the news provider.

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Cash for Clunkers has given a boost to consumer spending.