Tilted
..
I'm not sure how much play this story got from mainstream media this weekend. Bloomberg got some leaked emails from a couple of Walmart executives that paint an ugly picture. One of them reportedly read "n case you haven't seen a sales report these days, February (month-to-date) sales are a total disaster" and "[t]he worst start to a month I have seen in my (about) 7 years with the company."
Speculation is that this is the result of the increase in Social Security taxes (i.e. them going back to their prior level), which I tend to think is accurate. There's also been speculation that delayed tax refunds and that rising gas prices are to blame. That may be the case as well, but I suspect the first issue is the biggest one. I can easily believe that the lost income from the rise in Social Security withholding could affect the spending of a lot of Walmart customers.
I think this is significant news. Relative budget austerity (both decreased government spending and increased taxes) can, and likely in our case is going to, have significant effects on an economy.
Should we have let Social Security taxes rise? Not doing so would have meant larger deficits going forward, doing so means less spending money in the pockets of those living week to week and thus a drag on our economy in general. I happen to be an advocate for lower taxes (though I'm not a fan of policy that makes our tax system more progressive, which is what this particular tax cut had done). I'm willing to accept the short-term economic drag that comes from budget austerity, but I'd prefer that most of it come from decreased spending rather than increased taxes.
At any rate, I do hope we'll be realistic and honest with ourselves - in the face of potential economic slowing - about what the causes of that slowing are (e.g. our efforts to cut government spending). Recent experience leads me to suspect that hope won't be realized, however.
Walmart memo details monthly sales ‘disaster’ - FT.com
Speculation is that this is the result of the increase in Social Security taxes (i.e. them going back to their prior level), which I tend to think is accurate. There's also been speculation that delayed tax refunds and that rising gas prices are to blame. That may be the case as well, but I suspect the first issue is the biggest one. I can easily believe that the lost income from the rise in Social Security withholding could affect the spending of a lot of Walmart customers.
I think this is significant news. Relative budget austerity (both decreased government spending and increased taxes) can, and likely in our case is going to, have significant effects on an economy.
Should we have let Social Security taxes rise? Not doing so would have meant larger deficits going forward, doing so means less spending money in the pockets of those living week to week and thus a drag on our economy in general. I happen to be an advocate for lower taxes (though I'm not a fan of policy that makes our tax system more progressive, which is what this particular tax cut had done). I'm willing to accept the short-term economic drag that comes from budget austerity, but I'd prefer that most of it come from decreased spending rather than increased taxes.
At any rate, I do hope we'll be realistic and honest with ourselves - in the face of potential economic slowing - about what the causes of that slowing are (e.g. our efforts to cut government spending). Recent experience leads me to suspect that hope won't be realized, however.
Walmart memo details monthly sales ‘disaster’ - FT.com