How stimulating are the stimulus checks?

May will be a month filled with heady questions about the economy, with a close eye on how American consumers will fare with a little extra money in their collective pockets.

While many retailers are hoping Congress’s tax rebate stimulus checks will help usher individual consumers back into stores, builders and realtors are hoping the checks and other reforms will aid the struggling housing market. Consumers, meanwhile, appear split on where they’ll be spending the money.

Because of their role in monitoring Americans’ loans, the major U.S. credit reporting agencies have taken a special interest in the issue—according to TransUnion, a recent consumer survey showed 42 percent of respondents said they planned to pay down debt in some way with the additional funds. Twenty percent said they would save the money, and 16 percent said they would buy something they deemed necessary. Five percent reported they would “splurge.”

Credit reporting agency Experian broke down numbers from a similar survey in a different way—10 percent of respondents said they would spend at least some of the stimulus money on home repairs, and 4 percent said they planned to buy furniture or appliances.

Retailers are trying their best to court those who are planning to spend the money—several chains have offered stimulus check-specific promotions.

On May 1, Home Depot launched an ad campaign to en courage taxpayers to invest the stimulus checks in environmentally friendly products. The multi-pronged approach has included direct mail advertisements, radio spots and information on homedepot.com. In-store, another part of the May campaign, includes promotions on compact fluorescent light bulbs and Energy Star appliances.

“We will educate consumers on ways they can turn a short turn stimulus into a long-term investment by purchasing Eco Options products,” according to Home Depot representative Jean Niemi. Eco Options is Home Depot’s labeling program for environmentally friendly items.

Sears is trying a different route, giving a 10 percent bonus for gift cards purchased with stimulus check funds, provided the customer cashes in the full value of the check. The promotion only extends to customers who will receive paper checks. The cards can be used at any of Sears Holdings’ retailers, including Kmart and Lands’ End stores, as well as on the Web. Sears is promoting its stimulus check program with targeted e-mails, direct mail, online advertisements and in circulars.

In its own marketing campaign, the National Association of Home Builders (NAHB) has capitalized on the month of May as “National Home Remodeling Month,” with a campaign encouraging consumers to “invest wisely” on lower-cost, higher-value home improvement projects. Some of the projects the organization has highlighted include fixing drafts for better air flow; replacing siding; adding a small bathroom; and adding a deck, patio or porch.

The NAHB initiative gives some insight on how professionals are viewing the stimulus checks and how they might help the overall housing market. But despite the media focus on the checks themselves, other aspects of the federal economic stimulus plan actually are meant to benefit the housing sector more.

Those homeowners with high-cost mortgages, for example, particularly in areas with higher overall home prices like California, might be the first to benefit from a greater pool of home buyers if one major mortgage change works. The stimulus plan will temporarily raise the amount allowed form mortgages issued by Fannie Mae and Freddie Mac, the government-sponsored loan agencies. Under the plan, those two agencies can offer mortgages valued up to $729,750, significantly higher than the previous cap of $417,000.

The NAHB has praised the economic stimulus package in part—the group has lobbied hard for an overarching housing stimulus package, taking out a full-page ad in USA Today and holding several talks with members of Congress. But the group has also said more components will be needed in the coming months to stop the housing market from being “a serious drag on economic growth until the beginning of 2009,” in the words of NAHB chief economist David Seiders.

The NAHB is continuing to lobby for further reforms, including a tax credit on the purchase of a home and expanding the “net operating loss” tax deduction. While the former issue is meant to reduce home inventory, the latter issue is meant to benefit builders specifically. If that initiative were met with approval, the many builders who have experienced losses could reach back further into their profitable years and receive a rebate on taxes paid.

Paul Lopez, a spokes person for the NAHB, said while those issues—separate from Congress’s approved stimulus package—are yet to be decided, the group is cautiously watching the issues. “Until we see what the final House bill looks like, we are not doing media interviews on the subject,” he said.

Of the plan already approved by Congress, however, a third component does include tax breaks to businesses, most notably a 50 percent bonus deduction for depreciation of equipment. The bonus is meant to speed up a tax credit on depreciating assets and can apply to any asset put into use during 2008. The deduction includes tangible property and information technology items like computers and software.

In the end, it will take time for the full value of the stimulus plan to be realized and to see whether it will have the desired effect for the housing market. In the interim, it’s average taxpayers who will offer the most immediate view into whether the plan can spur consumer spending, when retail sales figures arrive at the end of May.