Thu Jan 10, 2013, 10:34 AM
Purveyor (29,432 posts)
Consumer Comfort Drops as Americans Brace for Payroll Tax Boost
By Alex Kowalski - Jan 10, 2013
Consumer confidence in the U.S. slumped last week to the lowest level in a month as Americans prepared to lose a portion of their pay to taxes.
The Bloomberg Consumer Comfort Index fell to minus 34.4 in the seven days ended Jan. 6 from minus 31.8 the prior period, the biggest one-week drop since August. All three components of the measure declined.
Paychecks will shrink after Congress agreed last week to let the payroll tax that funds Social Security benefits revert to 6.2 percent from 4.2 percent. With spending power diminished, Americans will have to rely on increases in salaries to counter some of the lost income just as the economy is struggling to strengthen.
“Policy tensions surrounding the budget standoff in Washington and the reset of the payroll tax were the likely catalysts for a decline in consumer comfort,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York. Prior to last week “most households were probably blissfully unaware that their after-tax income would fall as a result of the partial solution to the fiscal cliff.”
More Americans than forecast filed applications for unemployment benefits last week, a sign improvement in the labor market remains uneven, another report today showed.
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Consumer Comfort Drops as Americans Brace for Payroll Tax Boost (Original post)
Response to Purveyor (Original post)
Thu Jan 10, 2013, 10:52 AM
Yupy (154 posts)
1. Indeed, unfortunately my check already shrank, had to cut on lawn maint. services not good
for the economy, although we knew it was not permanent but I really believe it was a bad move at the time that the economy is so fragile. Unfortunately I am not the only one that will cut on services that will probably cut in working hours for some other people...sad, but I can't afford it.
Response to Yupy (Reply #1)
Thu Jan 10, 2013, 11:28 AM
Atman (30,020 posts)
3. Oh, my! Did it cut into your steak budget as well?
Mow your own lawn. How much, really, was the return to your original tax rate before the temporary tax holiday took effect? Did you have a lawn service BEFORE the tax holiday? Or did you only hire a lawn guy because you got a temporary 2% tax break? I'm smelling something stinky.