Higher Payroll Taxes Undercut Consumer Spending
The Wall Street Journal has pulled together the wisdom of businesses, business trade groups and economists and come to conclusion that higher payroll taxes and gasoline prices have undercut the recovery in consumer spending.
The Journal reports:
Wal-Mart Stores Inc. on Thursday joined a parade of retailers, restaurants and consumer-goods companies worried about the economic impact of the recently restored federal payroll tax that has left Americans with less money to spend.
The world's largest retailer, Burger King Worldwide Inc., Kraft Foods Group Inc. and others are lowering forecasts and adjusting sales and marketing strategies, expecting consumers with smaller paychecks to dine out less and trade down to less expensive purchases.
The expiration of the payroll tax cuts that knocked 2% off consumers' take-home pay is having an impact, these companies say. It will ding a household with $65,000 in annual income $1,300 this year, and shift $110 billion overall out of consumers' hands, estimates Citigroup.
Filed under: 24/7 Wall St. Wire, Economy, Tax