Will payroll tax hike hurt food-beverage spending?

Consumer spending seems on shakier ground since Washington allowed a 2% rise in the payroll tax.

Consumer spending, which showed promise in the latter stages of 2012, seems on shakier ground since Washington allowed a 2% rise in the payroll tax—which takes about $40 a week from a $100,000-a-year household.  It became effective Jan. 1, 2013. So will 2013 be a reprise of recent slow spending years? Enough evidence isn’t in yet.   Data show little change in food-beverage spend, comparing the first four weeks of 2013 with the final four weeks of 2012, says Symphony Consulting:  Dollar sales growth was constant, inflation slid to 1.0% from 1.4%, and private-label sales rose slightly. The tax hike became part of a money storm whipping at consumers through February:  rising gasoline and heating oil prices,  higher healthcare spending,  delayed tax refunds because filers weren’t allowed to submit until Jan. 30,  hurricane-sandy-damage-new-jersey.jpg and in the Northeast slow distribution of disaster-recovery funds to families devastated by Hurricane Sandy. There’s anxiety in the short term, however.  Bloomberg reported a Feb. 12 internal e-mail from Walmart’s vp-finance and logistics Jerry Murray that called February’s month-to-date sales “a total disaster.  The worst start to a month I have seen in my approximate 7 years with the company.”  The Lempert Report sees more stratified consumer spending ahead in 2013.  We believe higher-income households will feel buoyed by a “wealth effect” if the stock continues to rise and housing prices continue to recover.  According to Gallup, 87% of Americans earning $75,000+ annually own stocks vs. 54% of the population overall. They’ll likely feel less stung than lower-income households by the 2% payroll tax increase.