Consumer Confidence Plunges as Payroll Tax Holiday Ends

ShoppersBy MARTIN CRUTSINGER

WASHINGTON -- 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.

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.

Conference Board economist Lynn Franco said the tax increase was a key reason confidence tumbled and made Americans less optimistic about the next six months.

Congress and the White House reached a deal on Jan. 1 to prevent income taxes from rising on most Americans. 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.

The return to the higher, pre-"holiday" tax comes 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.

The decline in confidence comes as the economy is signaling improvement elsewhere. A recovery in housing market is looking more sustainable and is expected to strength this year. Auto sales reached a five-year high of 14.5 million in 2012. Analysts expect sales will climb even higher this year, to 15.5 million. Stocks are also near their all-time highs. The Standard and Poor's 500 has more than doubled from its low in 2009 and is just 4 percent shy of its record high set in 2007.

Still, the job market remains sluggish. Employers have added an average of about 150,000 jobs a month for the past two years. That's enough for a gradual decline in the unemployment rate, which remains high at 7.8 percent.

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41 Comments

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gmydogbud

Well it's only fair afterall this is what the American people voted for; sombody has to pay for all the give aways! At least they had a say in being taxed, Senior Citizens had no say in the matter, when President Obama took over Seven Hundered Billion Dollars out of Medicare, to help fund his "Obama Care"!

February 04 2013 at 9:47 AM Report abuse +1 rate up rate down Reply
dembaitnswitch

HEY BARRY ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,YOU SUCK

January 30 2013 at 3:11 AM Report abuse +3 rate up rate down Reply
dembaitnswitch

dumbazz demoncrats

January 30 2013 at 3:08 AM Report abuse +3 rate up rate down Reply
paddleman1928

consumer confidence changes every couple of months. People are too stupid to rtealize what ntheir situations are.

January 29 2013 at 11:21 PM Report abuse rate up rate down Reply
Mingo

Where are the real jobs not goverment phoney jobs When all the new taxes and fees kick in people will not be able to buy much Please don't tell me about taxing the rich ,they got more loopholes and more places to hide there money No real jobs no buying power Funny taxes went up and the rich got richer and hollywood is on a free ride

January 29 2013 at 10:44 PM Report abuse +7 rate up rate down Reply
1 reply to Mingo's comment
bakethis

That's what most of the 50.9% voted for. Course they don't pay taxes or worry about getting a job.

January 29 2013 at 10:57 PM Report abuse +2 rate up rate down Reply
1 reply to bakethis's comment
chris1011

It's more than 50.9%, bake.Take a look at the latest polls:

President Obama's popularity among constituents is rising in the early days of his second term. According to a Washington Post/ABC News poll, 60 percent of respondents said they had a favorable view of the president, while only 37 percent said they had an unfavorable view. This is the highest his favorability has been since 2009, the first year of his first term, when he received 79 percent positive responses in a similar poll.

January 30 2013 at 12:38 PM Report abuse +1 rate up rate down
democracks.o

Somehole I want to see how fast you can sign into all your other screen names to vote my comment down -15?

Ready set goooooooooooooooo

January 29 2013 at 8:59 PM Report abuse rate up rate down Reply
1 reply to democracks.o's comment
democracks.o

LMAO Later Somehole. Gotta go

January 29 2013 at 9:00 PM Report abuse -1 rate up rate down Reply
democracks.o

I don't think Somehole likes me. He rates my comments down more then anyone else's. I wonder how he rates them down so many times with only one screen name. LMMFAO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

January 29 2013 at 8:52 PM Report abuse +1 rate up rate down Reply
democracks.o

Where are you Somehole? Oh I forgot he's busy right now signing into all his other screen names to vote comments down. You're slowing up there Somehole. You should have them rated down by at least -4 by now.
LMAO

January 29 2013 at 8:50 PM Report abuse -1 rate up rate down Reply
democracks.o

Somehole which of your other screen names did you use to rate my comment down to -2?

January 29 2013 at 8:49 PM Report abuse rate up rate down Reply
democracks.o

somey5
democracks.o

No but he's been copying my screen name and adding a 1 after it and posting stuff. What a simp he is.
====================================================
A simp you most certainly are.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
LMMFAO ROTF
Nah Nah I know you are but what am I. Did you learn that in kindergarten class today Somehole.
Did you just finish counting your foodstamps somehole

January 29 2013 at 8:40 PM Report abuse -2 rate up rate down Reply
1 reply to democracks.o's comment
democracks.o

LMAO he rated my coment down. I want to see it rated to a -15

January 29 2013 at 8:43 PM Report abuse -2 rate up rate down Reply