Americans cut spending to cope with payroll-tax increase
A change in federal tax law that decreased the take-home pay of working Americans is affecting household budgets, according to a survey by the National Retail Federation (NRF), a trade association.
On Jan. 1, 2013, Congress passed the American Taxpayer Relief Act of 2012, the so-called fiscal cliff bill that was signed into law the following day. The legislation did not extend a 2% temporary payroll-tax cut in effect since 2011, thus increasing from 4.2% to 6.2% the Social Security (FICA) employee tax on the first $113,700 of wages. The portion of the tax employers pay remains at 6.2% of employee wages for a total Social Security FICA tax of 12.4%. The Internal Revenue Service issued new 2013 tax withholding tables for employers.
The NRF’s 2013 Tax Returns Survey, which polled 5,185 U.S. consumers from Feb. 5-13, 2013, revealed that nearly three-quarters (73.3%) of respondents said their spending plans were taking a hit.
“A smaller paycheck due to the fiscal cliff deal, higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” said NRF President and CEO Matthew Shay in a press release.
When asked how the new federal tax laws have affected spending, saving or budgeting of their households:
• Nearly six in 10 (58.2%) of respondents said their plans have been either somewhat or greatly affected.
• Nearly half (45.7%) said they will spend less overall, and 35.6% will watch for sales more often.
• Of those who said they had been greatly affected by the tax increase, nearly half (49.2%) will delay major purchases, such as a car, TV or furniture, and 58.2% will dine out less frequently. Another 43.4% will contribute less to savings, 46.4% will comparison-shop more often, and 54.4% will spend less on clothing.
• Fifty percent of those who make under $50,000 a year said they will spend less overall. Additionally, 23.2% will spend less on groceries, compared with 16.7% of consumers who make more than $50,000 a year, and 27.6% will shop at discount stores more often, compared with 19.7% of adults making more than $50,000.
“Americans are extremely mindful of how they spend their hard-earned money these days,” said BIGinsight Consumer Insights Director Pam Goodfellow in the same release. “Thanks to years of practice stemming from high gas and food prices and an uncertain economy, families will adjust to the changes in their take-home pay by purchasing generic brands, searching for coupons, downgrading on services like cable and Internet, and re-evaluating their overall spending habits.”
©2013 SHRM. All rights reserved.
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Residential Building Products & Technology launches iPad app
Residential Building Products & Technology, the all-digital magazine covering the latest products, trends and technology for residential construction professionals, is now available as an iPad app.
The new magazine is available as an iPad app and online digital edition. It features stories on top gadgets, the return of luxury building projects, linear bath drains and lots more. Fully interactive iPad and Android apps for the magazine are in development. More content is available at resbuildmag.com.
The digital magazine’s preview issue features stories on top gadgets, the return of luxury building projects, linear bath drains and much more. The magazine features in-depth editorial analysis of contemporary building concepts, along with striking visuals, product videos and interactive features
Residential Building Products and Technology is the latest product from Lebhar-Friedman’s Residential Products Group. At the helm of the new digital publication are veteran building publisher Jack Brannigan and editor-in-chief Nigel F. Maynard. Maynard’s work has appeared in This Old House, New Old House Magazine, inform: Architecture + Design, Bethesda Magazineand Arlington Magazine.
The editorial mission of Residential Building Products & Technology includes the promise to dive below the surface of building products and examine the trends and the details that allow builders, remodelers and subcontractors to better serve their customers. Technology, technique and tools will all be featured along with the latest building concepts in the residential construction industry.
Consumer confidence rebounds in February
Consumer confidence rebounded in February, reversing three straight months of declines, according to The Conference Board, a private research group. The Conference Board’s closely-watched Consumer Confidence Index stands at 69.6, up from 58.4 in January. Economists had expected 60.5, according to research firm FactSet.
It was the highest reading since November’s 71.5 metric.
"Consumers’ assessment of current business and labor market conditions is more positive than last month,” said the group’s director of economic indicators, Lynn Franco. “Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly."
Consumers’ assessment of present day conditions improved in February. Those claiming business conditions are “good” rose to 18.1% from 16.1%, while those stating business conditions are “bad” decreased to 27.8% from 28.4%. Consumers’ appraisal of the labor market was mixed. Those saying jobs are “plentiful” increased to 10.5% from 8.5%, while those claiming jobs are “hard to get” edged up to 37.0% from 36.6%.
Consumers were more optimistic about the short-term outlook this month. Those expecting business conditions to improve over the next six months increased to 18.9% from 15.6%, while those expecting business conditions to worsen declined to 16.5% from 20.4%.