Effects of Social Security taxes going back up?

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
 

migtig

aka Mrs. Giant
I think a lot of Americans aren't working. That is the biggest issue.

I think working Americans are worried they'll lose their jobs.

I think those who do work are experiencing a lot of financial pain everywhere - not just taxes going up.

You mentioned gas, but the price of food is rising higher everytime I hit the store, medical plans for working Americans have higher costs, along with higher out of pocket expense, and I'm not even considering the so called luxury goods.

Individuals who are still working, who had "surplus" income, aka the ones that weren't living paycheck to paycheck, are now living paycheck to paycheck and the ones that previously were living paycheck to paycheck, I hate to think how they are surviving. Ketchup soup and saltine sandwiches? I was there as a kid and never want to be there again, but I "feel" it is coming for all of us.
 
I think a lot of Americans aren't working. That is the biggest issue.

I think working Americans are worried they'll lose their jobs.

I think those who do work are experiencing a lot of financial pain everywhere - not just taxes going up.

You mentioned gas, but the price of food is rising higher everytime I hit the store, medical plans for working Americans have higher costs, along with higher out of pocket expense, and I'm not even considering the so called luxury goods.

Individuals who are still working, who had "surplus" income, aka the ones that weren't living paycheck to paycheck, are now living paycheck to paycheck and the ones that previously were living paycheck to paycheck, I hate to think how they are surviving. Ketchup soup and saltine sandwiches? I was there as a kid and never want to be there again, but I "feel" it is coming for all of us.

Fair points, but most of those things have been true for quite a while and even in that environment Walmart has done fairly well. The question is why did sales become a "total disaster" (assuming they did) in February? What changed relative to months and years prior?
 

MMDad

Lem Putt
I think that a healthy economy could absorb any one of those factors you listed, but all of them together on top of the current weakness is too much.

The biggest impact to me is the impending sequester. I'm putting off optional purchases so that if we have a layoff or furlough I might be prepared. A lot of people around here seem to be doing the same, and I assume that is true anywhere with a military presence.
 

migtig

aka Mrs. Giant
Fair points, but most of those things have been true for quite a while and even in that environment Walmart has done fairly well. The question is why did sales become a "total disaster" (assuming they did) in February? What changed relative to months and years prior?

In relative to months prior, Christmas is over.

In years prior, everything I mentioned is all compounding and adding up over time and effecting more and more Americans every day.
 

Baz

This. ------------------>
//
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.
//

As if I already don't know, I'll be looking forward to the reaction of many here if/when the big cuts in spending take effect. Of course unemployment will rise and consumer confidence will plummet. The economy will tank, and those who have been clamoring for reducing the deficit at all costs will be the first to whine about the immediate economic conesequences, blaming it all on Obama.


Good times.
 
In relative to months prior, Christmas is over.

In years prior, everything I mentioned is all compounding and adding up over time and effecting more and more Americans every day.

I'm sure the effect on sales that Jerry Murray (the quoted Walmart executive) was referring to was considered year-over-year and was ugly in comparison to what would have been expected in February, not in comparison to what happened (or would have been expected) in December. Otherwise there'd have been little reason to note it as he did, especially with such dramatic language.

And some of those other things actually aren't compounding, the negative effect from them is diminishing - a lot of people are still out of work (i.e. that want work), but the number of them is decreasing (and more relevant for this consideration, the number of people working is increasing); the number of people out of work for long periods of time is decreasing; anecdotal suggestions to the contrary notwithstanding.
 

MMDad

Lem Putt
As if I already don't know, I'll be looking forward to the reaction of many here if/when the big cuts in spending take effect. Of course unemployment will rise and consumer confidence will plummet. The economy will tank, and those who have been clamoring for reducing the deficit at all costs will be the first to whine about the immediate economic conesequences, blaming it all on Obama.


Good times.

Of course you'll be here to remind us that even 4 years later it's still Bush's fault, right?
 
I think that a healthy economy could absorb any one of those factors you listed, but all of them together on top of the current weakness is too much.

The biggest impact to me is the impending sequester. I'm putting off optional purchases so that if we have a layoff or furlough I might be prepared. A lot of people around here seem to be doing the same, and I assume that is true anywhere with a military presence.

I think the impending sequester is also a major issue and is having a significant effect on many people's thoughts / choices.

And a healthier economy would surely remain healthier (i.e. as compared to a weaker economy) in the face of government budget austerity, but it would suffer from such austerity as well - e.g., instead of 5% growth you might see 3% growth, whereas when growth is already only 2% you might see 0% growth. The reality is that government spending is a big part of our economy, we've let it get to the point that it drives a lot of economic activity. That's unfortunate, but it's nonetheless the reality that confronts us. If we're going to get off the mother's milk, there's going to be some discomfort to be had in the short-term.
 

MMDad

Lem Putt
I think the impending sequester is also a major issue and is having a significant effect on many people's thoughts / choices.

And a healthier economy would surely remain healthier (i.e. as compared to a weaker economy) in the face of government budget austerity, but it would suffer from such austerity as well - e.g., instead of 5% growth you might see 3% growth, whereas when growth is already only 2% you might see 0% growth. The reality is that government spending is a big part of our economy, we've let it get to the point that it drives a lot of economic activity. That's unfortunate, but it's nonetheless the reality that confronts us. If we're going to get off the mother's milk, there's going to be some discomfort to be had in the short-term.

If the pain was going to be worth it, and we would emerge stronger, then I'd say go for it. Unfortunately, I don't see us making the hard choices as ling as there's an easy way out.

I'd gladly give up my quality of life if it meant that my kids would inherit a better world. But instead it looks like I'll be forced to give up my quality of life and my kids will be screwed even worse.
 

Beta84

They're out to get us
so even though the social security tax went down for a year, nothing changed, but now that it went back up we're all ruined?

bull####. It may have a minor impact, but overall there are other issues in play as other people have addressed.
 

GURPS

INGSOC
PREMO Member
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.



I don't think so .......

Prices have gone up, my wife spent $ 250 bucks at Wal-mart last friday ...
 

GURPS

INGSOC
PREMO Member
Individuals who are still working, who had "surplus" income, aka the ones that weren't living paycheck to paycheck, are now living paycheck to paycheck and the ones that previously were living paycheck to paycheck, I hate to think how they are surviving.


THIS ......

... my 'surplus' isn't so surplus anymore
 
As if I already don't know, I'll be looking forward to the reaction of many here if/when the big cuts in spending take effect. Of course unemployment will rise and consumer confidence will plummet. The economy will tank, and those who have been clamoring for reducing the deficit at all costs will be the first to whine about the immediate economic conesequences, blaming it all on Obama.


Good times.

I expect that to be the case to some extent as well, to what extent I'm not sure. The debt ceiling situation from 2011, the effects it had on the building economic recovery, and the blame placing that ensued, provide a noteworthy example. It seems to me that many Republicans (particularly many of those that were surprised that President Obama won and that Democrats did as well as they did in congressional races) still don't get how that masochistic dog and pony show injured their political brand among some less-partison fiscal conservatives and, to some extent, hurt their chances in 2012.
 

migtig

aka Mrs. Giant
I don't think so .......

Prices have gone up, my wife spent $ 250 bucks at Wal-mart last friday ...

I don't "big" grocery shop, just supplement (dairy, bread, fruits and veggies). My four bags of groceries have gone from $50-$60 to almost $100, with coupons and generic name products.

It's supposed to get even worse.
 
so even though the social security tax went down for a year, nothing changed, but now that it went back up we're all ruined?

bull####. It may have a minor impact, but overall there are other issues in play as other people have addressed.

Why would you assume that the Social Security tax having been lower for those 2 years had no effect? I think that's a quite naive notion. People having more money in their pockets - especially people that, because of their financial situation, tend to quickly spend whatever extra money they get - as a result of lower taxes is going to stimulate economic activity to some extent. Do you think all of those people just stuck the extra $40 or $60 or $100 a month under their mattress?

Whatever the pace of the economic recovery, it could have been slower - don't mistake 'still not great' for 'wasn't helped by anything.'
 

GURPS

INGSOC
PREMO Member
I don't "big" grocery shop, just supplement (dairy, bread, fruits and veggies). My four bags of groceries have gone from $50-$60 to almost $100, with coupons and generic name products.

It's supposed to get even worse.

my wife prides herself on being a bargain shopper ...... only buying stuff on sale, shopping 3-4 stores to get the best deal ...... she is frustrated now things cost so much ... she feels like she is not doing 'her job' to conserve dollars, by getting good deals
 
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