Despite Payroll Tax Increase, U.S. Consumer Spend More

Brent Phipps employer must reduce spending by $ 85000000000 in the fiscal year, due to absorption. As a result of the previous negotiations to avoid a fiscal cliff, as Phipps government workers see their payroll taxes rise by two percentage points. So why Phipps, a paralegal for the U.S. Department of Justice, to go shopping? Browsing the aisles of Target (TGT) in Washington, Phipps said the increase in payroll taxes will not change his spending habits. "I do not really pay attention to it," he said. "I can not say I'm not particularly 'Oh no, I'm not going to do X, Y, and Z.'" Consumer and business is considered a higher payroll taxes and cut federal spending as just speed error for the economy.

 

Americans save less and spend more for new car purchases as household net worth rose with increasing home values ​​and stock index hit a record high. "There are many things go in the right way," said Brian Jones, a senior U.S. economist at Societe Generale (gle) in New York. "To a certain extent, this neutralizing effect" of high taxes.General Motors (GM) and Ford Motor (F) predicts car sales, on pace for their best year since 2007, will remain resilient. "Consumer seem to make a higher payroll tax in peace, at least when it comes to replacing older vehicles," said Kurt McNeil, vice president of U.S. sales operations for GM, in a conference call March 1. Norris Home Furnishings, Fort Myers (Florida) based furniture retailer with three stores, exceeding its goal to achieve 15 percent of sales in January and February from a year earlier, the company owner Larry Norris said . Rising house prices in the region improved consumer attitude even in the face of higher taxes. Sales at U.S. retailers rose 1.1 percent in February, the largest increase in five months.The sales prospects encourage businesses to expand and add employees. U.S. Department of Labor data released on March 8, showed that employers added 236,000 jobs last month after rising by 119,000 in January, and the unemployment life fell 7.7 percent, the lowest in four years. Along with getting back on hourly earnings and average workweek, the latest figures bode well for consumer spending.At worth $ 66100000000000, net for households approaching prerecession peak above $ 67400000000000 achieved in 2007. Bloomberg Consumer Comfort Index for the week ending March 10 was at its highest level since April 2012. Ann Lally, a digital marketing consultant Atlanta, said he would spend the "several thousand dollars" on a ski vacation for a week in Deer Valley, Utah, in March with my brother and his mother. While the tax gone up, he said, "I'm budgeting for it." 'We held better than people think, "said Drew Matus, deputy chief economist at UBS (UBS). He added that while the economy is still some shuffling, "Do not count the U.S. consumer. Households what they do, to spend the money "That's part of the reason why" The first half did not seem terrible, and the second half will be better end "Bottom line: ... Rising employment and an increase in household net worth of $ 66000000000000 will encourage consumers to spend more.