By Susan Duclos
As has been mentioned before, in the fiscal cliff deal, Barack Obama received his tax increases and additional tax revenue that he consistently and very publicly demanded time and time again. Taxes were raised on upper income Americans and the payroll tax holiday was allowed to expire, cutting in to 77 percent of workers' paychecks and sending them home with less to spend.
Retailers such as Wal-Mart, Burger King Worldwide Inc., and Kraft Food's, just to name a few, have all now lowered their forecasts and are adjusting to the reality of consumers spending less.
The expiration of the payroll tax cuts that knocked 2% off consumers' take-home pay is having an impact, these companies say. It will ding a household with $65,000 in annual income $1,300 this year, and shift $110 billion overall out of consumers' hands, estimates Citigroup
Now, Wal-Mart is stocking more of its shelves with cheaper products, and smaller-size packages of diapers, toilet paper and snacks. Burger King is cutting its Whopper Jr. sandwich to $1.29 from about $2, and focusing advertising on its value menu items rather than higher-price salads or smoothies.
Kraft and meat supplier Tyson Foods Inc. TSN +2.03% are introducing more lower-priced products to help restaurants and supermarkets adapt to the consumer spending downshift.
These companies say the changes could be long-lasting and are revamping operations to better cater to consumers pinched by higher taxes, stagnant wage growth and rising gasoline prices, which jumped nearly 50 cents a gallon in the past month alone.
Less take-home pay is causing 45.7% of consumers to curtail spending, according to a survey released on Thursday by the National Retail Federation, a trade group. A quarter of consumers are delaying big-ticket purchases, a third are reducing restaurant visits, and about a fifth of shoppers are spending less on groceries, it said.
It isn't just the increase of taxes being taken out of paychecks that are affecting consumer spending, reports show that the high gas prices under the Obama administration's "leadership" are also affecting the bottom line.
Darden Restaurants Inc., which owns Olive Garden and Red Lobster, cut its fiscal-year profit and revenue outlook, citing "headwinds" from consumers pinched by higher payroll taxes and gasoline prices.
Barack Obama was sworn in as president on January 20, 2009. In the week that ended on January 19, 2009, the weekly retail gasoline price in the U.S. was $1.90/gallon.
Two days ago, US News reported : Prices have risen every day for more than a month now, with the current national average around $3.77 a gallon, according to AAA Fuel Gauge, 46 cents higher than it was just a month ago and jumping almost 16 cents in a week. Newser points out "gas prices have climbed almost 50 cents per gallon over the past month."
Welcome to the Obama Economy.
