Monterey, CA Payroll Tax, High Cost of Gas Hurting The Economy

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Wal-Mart reported weak fourth quarter profits with same-store sales growth of less than 1% and warned that January looked worse.  A 2% payroll tax increase, high gas prices and a three week delay in tax refunds is weighing heavily on lower income Americans.  "We hear them talking about it more than we're able to detect it in their sales patterns," U.S. CEO Bill Simon said on an analyst call on February 22. Melanie Burkhard told the Monterey Herald that the payroll tax cut has hurt her to the tune of $260 per month, money she just doesn't have.  "We had to do a flip on our budget.  This is money we used for things like going to a movie or splurging at Olive Garden.  Not anymore," she said.  She has been making fewer trips to WalMart partly due to the high cost of gas, which has gone up almost 50 cents per gallon over the last month across the nation and even more locally.  Californians are now paying $4.20 a gallon, on average, up 55 cents per gallon from a month ago.  Wal-Mart is the latest in a string of retail outlets including Burger King, Kraft Foods Group, Tyson Foods and Zale which say they are being squeezed by lower sales from low income Americans which are scraping to get by.  Burger King dropped the price of a Whopper from $2.00 to $1.29 and is focusing on advertising its value menu.  The U.S. Department of Labor on Thursday said that although consumer prices were flat in January for the second month running, core prices, which include volatile items like food and energy costs, rose at their fastest rates since May of 2011.  Despite signs the economy is improving modestly, the Median household income, adjusted for inflation, was down 1.5% in 2011 and is down 8.1% from 2007, according to the Census Bureau.  Until we can get the unemployment rate up to normal levels, the tepid economic outlook is likely to continue.

Please note that this blog reflects my personal opinion and may or may not reflect the opinion of Hands To Help Seniors and the individual members comprising the Board of Governors.