Reuters - Video

EDITION: U.S. | U.K. | IN

Business

Consumers hit by one-two punch

Wednesday, February 13, 2013 - 02:38

Feb. 13 - Higher payroll tax and gas prices are hitting the American shopper in the wallet and slowing retail sales. Conway G. Gittens reports.

▲ Hide Transcript

View Transcript

Slow going to the new year at U.S. malls and other retail outlets and the rest of the year might not be that much better. Retail sales grew an expected 0.1 percent in January, according to the Commerce Department, after a lackluster holiday shopping season at best. The new year brought with it the return of a 2 percent payroll tax and an unwelcomed surprise for consumers- a 10 percent jump at the pump, reasons enough to be concerned about the pace of consumer spending this year, says Lord Abbett senior economist and market strategist Milton Ezrati. SOUNDBITE: MILTON EZRATI, SENIOR ECONOMIST/MARKET STRATEGIST, LORD ABBETT (ENGLISH) SAYING: "My three fears about the consumer are that the employment growth will be slow and will probably remain slow. Business is being cautious for any number of reasons. The second concern I have is that perhaps this, the effects of this tax hike, or the end of a tax break would be more accurate way to put it, will linger longer than I would have thought. If the price of gasoline levels out here, the consumer will eventually adjust." But that adjustment could be painful. According to AAA, the average price of regular gasoline is $3.62 a gallon, setting a new record for this date, up from $3.51 the same day in 2012. And this after households spent more last year on gasoline than any time in history, according to the Energy Information Administration. That shift in dollars - resulting in flat spending at restaurants and bars last month and despite a resurging housing market - furniture sales were down 0.2 percent. Consumers, however, haven't totally shut their wallets - a good thing since 70 percent of all economic activity rests on the mighty shopper. The strongest growth of all categories last month was general merchandise, with department store sales up a full percent. SOUNDBITE: MILTON EZRATI, SENIOR ECONOMIST/MARKET STRATEGIST, LORD ABBETT (ENGLISH) SAYING: "I think the consumer is going to be a slow contributor to economic growth. I think we are going to probably avoid a recession this year. In fact, I'm almost certain of that, but it's going to continue this slow pace that we've been at since this recovery began." Barring any shocks, the National Retail Federation is forecasting sales outside of auto dealerships, gasoline stations and restaurants to rise 3.4 percent this year, slower spending than last year, as Main Street waits for a stronger economy to take shape.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Consumers hit by one-two punch

Wednesday, February 13, 2013 - 02:38

Top News »

Most Popular »

Investing 201 »

Bond investors brace for the end of Fed stimulus Bond investors brace for the end of Fed...

Fri, Oct 10, 2014 - (4:03)

Arian Foster = BlackBerry? Arian Foster = BlackBerry?

Fri, Oct 25, 2013 - (3:16)

Don’t miss these red flags for IPOs Don’t miss these red flags for IPOs

Thu, Oct 10, 2013 - (2:34)

Copycat currency trading Copycat currency trading

Wed, Oct 02, 2013 - (2:28)

When to dump a winner When to dump a winner

Tue, Sep 24, 2013 - (1:55)

Where gold might again attract Jim Rogers Where gold might again attract Jim Rogers

Thu, Sep 19, 2013 - (2:05)

Why savings interest rates won't budge Why savings interest rates won't budge

Fri, Sep 13, 2013 - (2:09)

Buy local? ETFs try the trend Buy local? ETFs try the trend

Thu, Sep 05, 2013 - (2:42)

Money Clip »

Will Apple Pay transform mobile payments? Will Apple Pay transform mobile payments?

Thu, Oct 16, 2014 - (2:45)

3 things to do before disaster strikes 3 things to do before disaster strikes

Wed, Sep 18, 2013 - (1:39)

Your must-do money list Your must-do money list

Wed, Sep 11, 2013 - (1:24)

The worst "best" financial advice The worst "best" financial advice

Wed, Sep 04, 2013 - (1:42)

Forget gold: The case for REITs Forget gold: The case for REITs

Fri, Apr 26, 2013 - (1:19)

3 rules for buying a house now 3 rules for buying a house now

Thu, Apr 18, 2013 - (1:39)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Dance of the northern lights Dance of the northern lights

Mon, Oct 20, 2014 - (1:08)

Images of September Images of September

Wed, Oct 01, 2014 - (1:00)

Still missing – MH370 Still missing – MH370

Fri, Sep 05, 2014 - (2:05)

Burning Together Burning Together

Mon, Sep 01, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)