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U.S. Consumer Confidence Takes a Beating on Higher Taxes

Jan. 29, 2013 4:36pm Becket Adams

U.S. Consumer Confidence Plunges on Higher Taxes

Getty Images.

U.S. consumer confidence plunged in January to its lowest level in more than a year, reflecting higher Social Security taxes that left Americans with less take-home pay.

“Consumer confidence posted another sharp decline in January, erasing all of the gains made through 2012,” said Conference Board economist Lynn Franco in a statement. “Consumers are more pessimistic about the economic outlook and, in particular, their financial situation.”

Franco said the tax increase was a key reason confidence tumbled and made Americans less optimistic about the coming year.

The Conference Board said Tuesday that its consumer confidence index dropped to 58.6 in January. That’s down from a reading of 66.7 in December and the lowest since November 2011.

“The thing that’s particularly troubling is the sizable decline in expectations,” Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, told Bloomberg. “As those expectations deteriorate, it doesn’t bode particularly well for day-to-day consumer spending.”

Congress and the White House reached a deal on Jan. 1 to prevent the nation from going over the so-called “fiscal cliff.” But they allowed a temporary cut in Social Security taxes to expire. For a worker earning $50,000 a year, take-home pay will shrink this year by about $1,000.

The survey was conducted through Jan. 17, at which point most people began to realize their paychecks were lighter.

Taxes are rising at a time when wages and salaries are barely growing. The combination is expected to hurt consumer spending and slow economic growth.

Many economists predict economic growth slowed in the October-December quarter to an annual rate of around 1 percent. That would be much weaker that the 3.1 percent rate in the July-September quarter. Most economists don’t expect growth to pick up much in the first quarter of 2013.

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The Associated Press contributed to this story. Featured image courtesy Getty Images.

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Comments (7)

toledofan
Posted on January 30, 2013 at 2:10pm
The guy did exactly what he said he was going to do; raise the taxes on the wealthies Americans. The problem is that everyone thought it was everyone else. To any Democrat anyone who has a job and earns a living is wealthy so get used to it folks you voted for this guy, not me. And the sad part of all of this is I get sucked into the mess because you were’nt smart enough to pay attention.

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Netsurfer2
Posted on January 29, 2013 at 9:58pm
It’s so interesting how the government seems to tax the working middle class into practical non-existence, while the very rich Dem’s don’t hardly pay anything (not to mention Hollywood and their loop holes)! Wages are getting tighter, food and other goods are getting higher! Now you can bet soon they will be at another world war! Not like you will even be able to get an education nor afford much else! Welcome to the new 3rd world folks! Bunker down, it’s going to get rough America!

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Silvertruth
Posted on January 29, 2013 at 7:14pm
The SS increase killed about every free dollar I had to spend, at least on fun stuff. So, yeah, I can see why it would hurt people that were already hurting, but hey, our President just laid claim to:

“I’ve lowered taxes for every middle income American during my time in office.”

Sorry, as a functionary of ‘every’ you’ve cost me a bundle Mr. President, this is just the latest in a bunch of taxes you’ve hit me with.

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Fubared
Posted on January 29, 2013 at 5:53pm
Consumer confidence excelled in S&W, Sig, Colt, Ruger, Federal, Remington, Winchester, Browning, Black Hills, Hornady…
We are so screwed.

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hempstead1944
Posted on January 29, 2013 at 5:42pm
Fools…..it isn’t just the taxes………

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- oldguy49
  Posted on January 29, 2013 at 6:00pm
  yep you gotta love it………..hey GUN CONTROL – AMNESTY…. got you to stop talking about the 16.5 trillion debt and jobs and all that money and arms we are shipping to our enemy’s…………..
  
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- barber2
  Posted on January 29, 2013 at 6:59pm
  OLD: And don’t forget the confidence in Washington with stellar appointments like John Kerry….
  
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