Tax Hikes Stymie Recovery, As Retail Sales Decline

[I AM NOT THAT GUY 5,715]

Retail sales point to flagging economic momentum

WASHINGTON — Retail sales contracted in March for the second time in three months and consumer confidence tumbled in April, a sign tax hikes early this year stole momentum from the economy.

Sales fell 0.4 percent in March, missing analysts' expectations for a flat reading, Commerce Department data showed on Friday.

The data suggests consumer spending was considerably weaker in the first quarter than analysts previously believed, and many cut economic growth forecasts for the period.

Prior reports had made consumers look relatively resilient despite an increase in tax rates in January on most Americans.

"The payroll tax increase is hurting," said Ian Shepherdson, an economist at Pantheon Macroeconomic Advisors in White Plains, New York.

Readings for sales have been volatile this year, making it difficult to know how much of the recent weakness has been due to higher taxes and how much might be because of temporary factors related to the weather.

But supporting the view that tighter fiscal policy is the culprit, a closely watched gauge of consumer spending unexpectedly fell in March and the government revised the readings for January and February sharply lower.

These so-called core sales, which strip out cars, gasoline and building materials, fell 0.2 percent last month. This measure corresponds closely with the consumer spending component of the government's measure of gross domestic product.

"The miss in retail sales sends concerns about the impact of higher payroll taxes," said Omer Esiner, a market analyst at Commonwealth Foreign Exchange.

Economists also cited an increase in gasoline prices earlier this year as a factor holding back sales.

Forecasting firm Macroeconomic Advisers lowered its estimate of first-quarter economic growth by three tenths of a percentage point to a 3 percent annual rate.

That would be much stronger than the 0.4 percent rate clocked in the fourth quarter, although much of the acceleration is expected to come from a temporary build up of inventories. Reinforcing that expectation, a separate Commerce Department report showed retail inventories rose 0.4 percent in February when stripping out cars.

Growth is expected to slow sharply in the second quarter largely because fiscal policy tightened further in March, when the federal government began across-the-board spending cuts known in Washington as the "sequester," part of Washington's efforts to shrink the budget deficit.

U.S. stocks declined on the weak retail sales data and as results from major banks failed to impress investors. Prices for U.S. Treasuries rose, while the dollar declined against the yen.

http://xfinity.comcast.net/articles/news-general/20130412/US-RETAIL-SALES/

[Mr. Big Dog 10,747]

Well, duh. You discontinue a particular economic stimulus measure - the payroll tax cut - and the economic stimulus from that measure will stop. That's pretty obvious. Of course, Republicans have long held that the payroll tax holiday was not stimulating the economy so it then follows that the retail decline must have other reasons.

[The Nature Boy 4,224]

I know I have battened down the economic hatches so to speak. I sold a car, paid off a car and did some other things to cut about 1500.00 monthly from my outflow. I think it's going to get worse. The market is up right now I am thinking of moving everything to secure stuff in the next few months.

[I AM NOT THAT GUY 5,715]

I know I have battened down the economic hatches so to speak. I sold a car, paid off a car and did some other things to cut about 1500.00 monthly from my outflow. I think it's going to get worse. The market is up right now I am thinking of moving everything to secure stuff in the next few months.

I am holding a lot of cash. With the new banking regs, there is no return for putting money in a bank, and the money market accounts are uninsured. There really is no secure stuff anymore, and you are not losing to inflation by holding onto cash. I have been reducing inventories, down to less than a thirty day supply, and if I can't turn it over in six months, I don't stock it. The rest I order as needed, or pick up local.

I am not the only one. I get calls all the time from people that want to invest in small businesses, and put their cash to work. People are desperate to make a decent return on their money, and tired of just sitting on it. I am using my down time to fix up the house. It will get much worse before it gets better.

[The Nature Boy 4,224]

I am holding a lot of cash. With the new banking regs, there is no return for putting money in a bank, and the money market accounts are uninsured. There really is no secure stuff anymore, and you are not losing to inflation by holding onto cash. I have been reducing inventories, down to less than a thirty day supply, and if I can't turn it over in six months, I don't stock it. The rest I order as needed, or pick up local.

I am not the only one. I get calls all the time from people that want to invest in small businesses, and put their cash to work. People are desperate to make a decent return on their money, and tired of just sitting on it. I am using my down time to fix up the house. It will get much worse before it gets better.

I got some rental properties. I am hoping they will do good as it worsens... I may by one more.. I have a guy managing them. I am seriously thinking about moving to the PI. I could live fat off just that over there, as long as I kept a nice big parachute fund somewhere and did not touch it . it would be nice to retire at 51. ican't quite do it yet and live here

[himher 634]

I believe we are headed back to Saudi. I am seeing our clients cut back on their capital and expansions that were planned last year for this year are being cancelled left and right.