Retailers are preparing for a triple whammy as the restoration of the payroll tax, surging gas prices, and stagnant employment and wages take a bite out of consumers’ disposable income, leaving them with less cash to spend on clothing, groceries, and eating out.
But the world is going to end if their is a 3% cut in the increase in spending! OMG! The Sky is Falling! 🙂
As a result, more than three years after the recession officially ended, American consumers might be preparing to downshift again, if only slightly, with low-income consumers hit the hardest. Sensing consumer trepidation, retailers are scrambling to adjust.
Retailers, restaurants, and consumer goods companies like Wal-Mart are lowering sales forecasts and adjusting marketing campaigns ahead of expectations that consumers will slash spending, the Wall Street Journal reports.
But Government wants to Spend Even More!
In a survey released Thursday, the National Retail Federation (NRF) said some 46 percent of consumers plan to spend less as a result of the payroll tax increase. One-third said they will reduce dining out and one-quarter will spend less on “little luxuries,” like manicures and trips to coffee shops.
“A smaller paycheck due to the fiscal cliff deal early last month, higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” Matthew Shay, president and CEO of the NRF, said in a statement.
And that’s all the Republican’s Fault! (or Bush’s)… 🙂
Originally enacted in December 2010 to help taxpayers weather the recession and to spur economic activity, the payroll tax cut expired Jan. 1 of this year. The restoration of the tax effectively raised the rate from 4.2 percent in 2012 to 6.2 percent in 2013, shaving 2 percent from consumers’ take-home pay.
Can you say Bait and Switch to bribe the stupid to vote for the Democrats…
That means Americans making $50,000 a year will pay $83 more in taxes each month, almost $1,000 more each year. Those making $75,000 will pay $125 more each month, or $1,500 more each year. As retailers see it, that’s $1,500 less a consumer has to spend on groceries, household goods, and dining out.
Multiply that by 153.6 million people in the labor force and retailers start to panic. According to an estimate by Citigroup, the expiration of the payroll tax cut will move $110 billion out of consumers’ pockets.
So Democrats can spend it on paying off their Apparatchiks, looking like they “care” and blaming it all on “rich” people and Republicans.
And the Republicans don’t do anything about it! Which is also very galling.
For high-end consumers, the payroll tax may not change a thing, and for many middle-income consumers, it will likely result in only a subtle shift. But the impact is most likely to be felt among low-income consumers and the businesses they tend to frequent, like Wal-Mart.
“It’s a big deal,” says Morgan Housley, a macroeconomic analyst with Motley Fool, an online financial education website. “The biggest impact is on lower-income households since the payroll tax is regressive, only applying to the first $113,000 of income. Wealthier households don’t feel the same pinch because the tax doesn’t hit all of their income. Lower-income households also spend a larger share of their income than wealthier consumers.… Low-income families are in one of the toughest spots they’ve been in since 2009.” (CSMonitor)
But remember, ask a liberal about it and they’ll give you the political answer of, “well it’s that same as it was 3 years ago” before the cut so it’s not an increase.
Tell that to their pocketbooks. They play games with you but you can’t hold them accountable for it. Your the Mouse and they are the Cat. So, you’re just a Cat toy…
Oh, and it’s the Republican’s/Bush Fault!! Can’t for get that one.
And Republican just want to throw grandma out on the street to eat trash and dog food!
The dishonesty of it all is so galling.
Speaking of Galling…
Who says intransigence doesn’t pay? After driving Hostess out of business by refusing to negotiate, union bakers have been rewarded by the White House with Trade Adjustment Assistance. It’s all the foreigners’ fault.
Politics: Who says intransigence doesn’t pay? After driving Hostess out of business by refusing to negotiate, the White House has decided to reward the union bakers with Trade Adjustment Assistence, blaming foreigners. What a sweet deal.
Last November, Hostess Brands went into liquidation, throwing 18,500 employees out of their jobs. The baking giant had been through two restructurings, but the company remained unprofitable.
All the same, most workers at the bread and pastry maker, famous for its Twinkies and Ho Hos snack cakes, were willing to tighten their belts until good times returned.
They included hard-line unions, such as the Teamsters, not known for making concessions.
But there was one exception: the AFL-CIO-affiliated Bakery, Confectionery, Tobacco Workers & Grain Millers International (BCTGM).
It refused to deal, taking the entire company, including fellow workers, down with it.
Turns out the union knew exactly what it was doing.
This week, the Labor Department decided to shower Hostess workers with Trade Adjustment Assistance, a multibillion-dollar pork barrel program that was beefed up as a bone to Democrats, who were blocking passage of three free-trade treaties in Congress in 2012.
Politically Correct “obstructionism” and being a Party Apparatchik pays! $$$$
TAA is a lavish program doled out by the Labor Department for laid-off workers who’ve lost their jobs due to “global trade.”
Aka, Apparatchik pay offs.
It provides worker retraining due to the supposed evils of free trade — plus moving expenses, baby-sitting expenses and as much as two years of unemployment pay. If a worker ends up making less than his union salary afterward, Uncle Sam spots the worker for 50% of the supposed lost wages in a “free” subsidy.
What’s more, “virtually anybody can qualify,” said TAA certifying officer Elliott Kushner in an interview with the Wall Street Journal.
As long as you’re an Apparatchik.
Kushner was the one who signed off on shoveling the pork to Hostess. (IBD)
So Liberal “obstructionism” that brings down a whole Business is rewarded.
It pays to be a Union “obstructionist” and make everyone lose their job.
Just because they are Apparatchiks of the Party!
So be of The Body, or be screwed.
Do what we say when we say it or else!
In Hostess’ case, labor costs were almost certainly a factor. The Labor Department says the average wage for bakers nationally is $11 an hour.
The unionized Hostess bakers were pulling in as much as twice that amount, which, together with pensions, was what made the company uncompetitive.
Imports weren’t the problem.
But it’s so much easier to blame foreigners, even if no significant foreign goods can be found.
This shows how something like the TAA can turn into a perverse incentive, encouraging all workers to make no concessions in tough times, even if it means saving their company.
The BCTGM union’s intransigence was directly responsible for the liquidation of Hostess Brands.
Yet the same union is being rewarded with premium unemployment packages that encourage its members to go on the dole — and to blame foreigners for it.
Undoubtedly, more examples of this perverse incentive will take down more companies, an unintended consequence of a boondoggle that sounds good on paper.
It’s not good. It’s a reward for those who refuse to negotiate, and a sop to the manipulative unions that are most adept at gaming the system.
This doesn’t create value. It’s corruption. (IBD)