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Debt ceiling: With debate on hold, where is US economy headed now?

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"We were fortunate to get that 2.5 percent increase," says Bill Martin, founder of ShopperTrak, which is based in Chicago.

Less cash in our pockets

Almost all working Americans entered the new year paying more taxes because of the expiration of the two-year cut in payroll taxes. On Jan. 1, those taxes, which normally pay for individuals' contributions to Social Security, rose from 4.2 percent of earnings to 6.2 percent.

In terms of the entire economy, it's not that much money – about $120 billion, estimates Roberton Williams, a fellow at the Tax Policy Center in Washington.

"But it is just dead weight on the economy," he says. "It takes $120 billion out of the economy that could have been spent."

Mr. Williams estimates it comes to about $900 to $1,000 per household, or $20 per week.

No one knows what actually happened to the money over the past two years, Williams says. He thinks low-income wage earners "spent it before they got it." Middle-income earners may have used some of it to pay bills. "I'm sure at the top end it was all going to the bank," he says.

The way John Canally, chief economist at LPL Financial, views the increase in the payroll tax: It absorbs a 1 to 2 percent pay raise.

"It will be almost all taken away since this tax went up," says Mr. Canally.

TAIL WINDS

A rebounding housing market

The housing market will continue to help the US economy grow as developers try to meet a rising demand for apartments and to a lesser extent new homes.

In the coming year, construction of single-family homes will rise by 20 percent and multifamily units, mostly apartments, will increase by 37 percent, estimates IHS Global Insight, a Lexington, Mass., economic consulting firm.

In fact, new housing construction will contribute 20 percent of America's GDP growth in 2013, estimates IHS.

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