Switch to Desktop Site
 
 

Why is Wal-Mart worried? Payroll tax could cut consumer spending. (+video)

Recent reports forecast lower spending for this year, anticipating that the restored payroll tax will impact consumers' wallets, especially low-income earners. Wal-Mart is adjusting its strategy.

Wal-Mart's profits can indicate how the nation's economy is doing. Recent reports forecast lower spending at the retail giant this year.
About these ads

Retailers are preparing for a triple whammy as the restoration of the payroll tax, surging gas prices, and stagnant employment and wages take a bite out of consumers’ disposable income, leaving them with less cash to spend on clothing, groceries, and eating out.

As a result, more than three years after the recession officially ended, American consumers might be preparing to downshift again, if only slightly, with low-income consumers hit the hardest. Sensing consumer trepidation, retailers are scrambling to adjust.

Retailers, restaurants, and consumer goods companies like Wal-Mart are lowering sales forecasts and adjusting marketing campaigns ahead of expectations that consumers will slash spending, The Wall Street Journal reports.

 

In a survey released Thursday, the National Retail Federation (NRF) said some 46 percent of consumers plan to spend less as a result of the payroll tax increase. One-third said they will reduce dining out and one-quarter will spend less on “little luxuries,” like manicures and trips to coffee shops.

Next

Page 1 of 4

Share