Consumer Spending Rises in January Despite Payroll Tax Increase
Retail sales rose 0.1 percent in January, according to the Commerce Department, even after a 2 percent payroll tax increase went into effect Jan. 1. In addition, excluding automobiles and gasoline, sales rose 0.2 percent. It was the third consecutive month of retail sales gains. The strongest gains were in merchandise and department stores, which rose 1.1 percent and 1 percent, respectively. Combined with decent job creation numbers to start the year and other positive data on business activity, the economy appears to be holding up in 2013 despite the tax increases implemented as part of a deal to resolve the fiscal cliff at the end of 2012. Rising stock market prices and home values also could help drive consumer spending in 2013.
From “Good News! Consumers Didn’t Ratchet Back Their Spending in January After the Payroll Tax Hike”
Washington Post (02/13/13) Irwin, Neil