Retailers: Payroll Tax Hit Is Going to Hurt
Nearly half of consumers say they'll spend less: survey
By Matt Cantor, Newser User
Posted Feb 22, 2013 3:26 AM CST
Wal-Mart is showcasing cheaper products as the payroll tax returns.   (AP Photo/Damian Dovarganes)

(Newser) – Major retailers are preparing for customers with less cash in their pockets, thanks in part to the newly restored payroll tax, the Wall Street Journal reports. Rising gas prices aren't helping, either. Some 45.7% of consumers plan to spend less in the face of 2% lower take-home pay, a trade survey finds—so companies like Walmart and Kraft are trumpeting less expensive items while Burger King cuts the price of a Whopper Jr.

Consumers as a whole will have $110 billion less to spend this year because the payroll tax cut expired last month, Citigroup says. Meanwhile, gas prices have climbed almost 50 cents per gallon over the past month. With a lower-income customer base, "Walmart serves as a leading indicator" of consumer habits, says an analyst. But others are more positive about spending after the tax change: Once people "start to accept it as the new normal, they'll go back to their normal spending patterns," says a restaurant strategist.

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right2dave
Feb 25, 2013 6:09 AM CST
Obama leads the charge of the recovering economy?
HMD-SMD-ITY
Feb 24, 2013 11:19 PM CST
My own solution was to cancel some of the deductions. I cancelled my FSA. That was $80 per month. I talked to my doctor and we worked out a new medicine schedule to save money. I'm eating out much less and haven't been to some of my favorite places in months now. When I do eat out, I'm ordering larger entrees and always taking half of it home for the next meal. But I'm now down to 2 meals per day. IN order to keep the 2 meals from causing weight gain, I've started a chemical weight loss plan. Its based on high fiber. It lowered my blood sugar and pressure so much that I had to dial down my HBP medicine. The doc told me to go back to a more normal snacking habit so it doesn't tank my glucose. I couldn't afford to buy smaller jeans so I just cut down a belt. I had to take sizzors to my leather belt and par it down. I had to drill some extra holes so it would fit. My shoes were horrible with cracks in the soles. I couldn't see fit to even buying a $20 pair at Payless so I bought a $3 tube of black silicone from Autozone and fixed the cracks myself. A buddy gave me his Soda Stream machine with a new Co2 cartridge. I had to buy the flavors. J.C. Penney now sells them for $5. I'm only using half the required flavor to make a 1 liter bottle of drink. I'm stretching life as far as I can. I just hope life is not like a rubber band and pops accordingly. I'm living as efficient as I can and if there is another place I can cut, shrink, downsize, economize, or reduce, then maybe it would be to go off the grid. But this message is being typed on a computer I put together from the recycle bin at work and the wifi I am using is free. I'm accessing it via a Chinese fry basket wired to a pole outside my window with a dongle positioned at the focal point by a cut up clothes hangar. I've hit wifi spots up to 6 miles away. My hot water is from a solar heating unit I created from an old Mechanic's Illustrated article. If I add a wind and solar power generator, I will have arrived.
793tango
Feb 24, 2013 11:00 AM CST
Adjust to the 'new normal' and we'll go back to our previous spending habits? How? You can't buy things with no money. Oh yeah there are a lot of people who shop on credit. Sorry I'm not one of them. The payroll tax hike (which we really did need), took $8.00 a week out of my pocket. That's money that I can use for all kinds of things. There's no place to make that up or cut any more unless I stop eating altogether. I'm down to one meal a day now.