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Are You Spending Less?

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  • Description

    Merchant Forecast CEO Dan Hess on the payroll tax hike’s impact on consumer spending.

  • Duration 3:16
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This transcript is automatically generated

Hey I love -- any money left to go by those burgers congratulations committee haven't done by now you have the most certainly felt that payroll tax hike.

The big question it though is are you cutting back on your spending because that.

Well the latest reading on retail spending shows sales edging up just a tiny fraction in January basically in line investments.

-- our next guest sees a more drastic impact.

He sees two thirds of store owners say the payroll tax -- has had an immediate negative effect on spending.

That's the CEO of -- merchant forecast joins us now you know a lot of has to do with the fact that -- You know if you don't get paid weekly.

Even really feel it before these retail sales numbers were taken we haven't seen a lot of the damage right so.

You know January we saw a little bit of the hit the we've been asking store managers every single week since the increased took place.

And every week it's gotten more and more concern.

I mean look at -- you don't have the money you have to cut back on spending right it's just pretty obvious for sure did the percentages don't don't look that high in the surface but if you take out all the things.

That aren't discretionary.

He can be as much as 30% of what's left.

Right and we attention -- -- gas prices are up we've been talking about this and then you have a great point to the delay in tax refunds.

All because of our our final national -- -- too long to make a decision.

This a big deal.

Twenty some billion dollars that have been delayed.

Only a billion and they came out of January.

And means about eighteen and -- -- nineteen billion dollars in February.

Results we haven't seen yet in the capital markets so we -- February's -- really gonna show the impact of that.

-- the money comes later but we don't think you get it all back.

So what happens -- into these retailers have to you know adjust prices going forward now how are they gonna make up for the difference here come the sales and.

So every single week sense the end of January we've seen increased promotional levels.

Levels that are 1520%.

Higher than a year ago.

It's a form of mild panic right now.

As the numbers get worse we're gonna see more and more promotions at the mall are any of these stores situated to handled answers it exists is going to be across the board.

I think the higher end is in better shape so the -- -- customer doesn't appear to be -- Hurt and even that at the upper middle retailers like the gap or Nordstrom seem to be faring pretty well -- it off.

The lower the price point the more economical the retailer like Wal-Mart and dollar stores who big -- and it's interesting because again you know.

Unintended consequences the administration did not want to hurt the middle class the lower class lower income people and that's exactly who's going to her -- -- that's who gets hurt them ups and it's exactly the opposite of what they intend.

Real quick when we start to see these refunds come out do you think you'll make up for the difference I don't think so not entirely.

We have an earlier Easter this year for apparel that means a shorter selling window at full price on spring.

So the calendar doesn't it isn't had an advantage for the retailers.

So -- the money will come -- we don't think it'll come at a time when there's full price selling out there.

Therefore margins get hurt.

Not going to be kids to these retailers than Dan -- thank you very --

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