Tue Jan 29, 2013, 10:22 AM
Purveyor (29,432 posts)
Consumer Confidence in U.S. Falls to Lowest Level Since 2011
By Jeanna Smialek - Jan 29, 2013
Confidence among U.S. consumers declined more than forecast in January, reaching the lowest level in more than a year as higher payroll taxes took a bigger bite out of Americans’ paychecks.
The Conference Board’s index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64.
The drop in confidence coincides with a two percentage- point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pickup in spending in the fourth quarter. The outlook for employment prospects and incomes also deteriorated this month, today’s data showed.
“The uncertainty and bickering is weighing it down,” Richard F. Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, said before the report. “I’m convinced that a lot of people didn’t realize that their taxes were going up in January. These higher payroll taxes, they’re going to put that much of a dent in disposable income.”
Read more: http://www.bloomberg.com/news/2013-01-29/consumer-confidence-in-u-s-falls-to-lowest-since-november-2011.html
4 replies, 1345 views
Consumer Confidence in U.S. Falls to Lowest Level Since 2011 (Original post)
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Response to Purveyor (Original post)
Tue Jan 29, 2013, 12:30 PM
PSPS (6,576 posts)
1. LOL. Yes, blame it on "the payroll tax."
Never mind that people are realizing that we're going to have at least another two years of a "do nothing congress." Or that the Justice Department will remain closed for the next four years.
Response to PSPS (Reply #1)
Tue Jan 29, 2013, 04:17 PM
Morganfleeman (117 posts)
2. C'mon now
It's ABSOLUTELY related to the expiration of the payroll tax cut. Fact of the matter is most people had no clue that the payroll tax would rise this year. Most people unfortunately are ill informed and were caught off guard by the lower take home pay. The Chief Economist of the Comference Board said as much. But you don't need his opinion to make the logical connection between less take home pay and lower confidence.
Response to PSPS (Reply #1)
Tue Jan 29, 2013, 10:17 PM
Yo_Mama (8,148 posts)
3. Yes, it's the payroll tax mostly
Many households are too strapped to easily swallow it:
The following graph only goes through Q3 2012, but you can see how things have tightened up since the Fed started playing around with stimulus. There are huge numbers of households that live on moderate incomes that cannot withstand the price increases for basics.