The iPod is many things: portable media player (if you take the literal approach); style accessory; style icon (if you buy into the marketing speak); even lifestyle choice. Next the humble iPod could could emerge as the unlikely saviour of America’s flagging economy.

About $60 billion (£30.5 billion) is expected to pour into shopping malls in June and July as Americans rush to spend the tax rebates handed to them by Washington, which are intended to kick-start the economy. Economists expect much of the rebate money to be spent on household goods and electrical items — and that means television sets and iPods.

Last month, President Bush and Henry Paulson, the Treasury Secretary, unveiled a series of proposed tax rebates worth about $150 billion, which return cash to low and middle-income Americans and offer investment incentives to business. The move was designed to boost consumer demand — a key driver of US growth — and help to bring the world’s biggest economy away from the brink of a recession. Cheques will start to be sent out in June.

Kevin Logan, senior economist at Dresdner Kleinwort, the investment bank, in New York, said: “Typically, Americans spend their tax rebates from these kinds of fiscal stimulus packages on durable and non-durable goods. Service spending is less affected — people have to pay their rent, electricity and gas bills regardless. These kinds of stimulus packages trigger a rise in sales for clothing, household furnishings, and household goods.”

Unlike previous fiscal stimulus packages, such as Mr Bush’s first programme in 2001, the 2008 rebates will benefit families and individuals on very low incomes. Mr Logan said that people on lower incomes were more likely to spend cash given to them than their wealthier counterparts: “If you have an annual taxable income of $3,000 and you receive a $600 cheque, that is 20 per cent of your income. It is more likely to affect your spending behaviour than for someone who earns significantly more. The rebates are now designed to be pushed further down the income ladder.”

Mr Logan and Douglas Elmendorf, co-author of If, when, how: A Primer on Fiscal Stimulus, commissioned by the The Brookings Institution in Washington, agree that the package of rebates will be labelled as a success if it triggers a better than expected rise in consumer spending in the third quarter of the year.

Mr Elmendorf, a former senior economist at the White House, said: “Spending should be stronger than anticipated — so if, by the third quarter of the year, the economy is doing terribly, then we would have — expected retail sales to be weak. If this package is a success, then we would expect to see consumer demand fare better than expected, relative to those current conditions.”

Money go round

Where does the idea of fiscal stimulus packages in the United States come from?

— From the ideas of John Maynard Keynes, the British economist

— He argued that the State and the private sector have key roles for a healthy economy and tried to devise ways in which they could work together, unlike the laissez faire school of thought, which claimed that markets and the private sector should be left alone with no state intervention

Keynes’s multiplier effect

— Keynes thought that a government could stimulate a great deal of production from a modest outlay, if the people who received money from a government spent it on consumer goods. That spending would allow companies to employ and pay more people, which would trigger more consumer spending

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