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AEI Economist Phillip Swagel weighs in on February consumer spending and the payroll-tax hike.
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Here to discuss the fragile state of the US consumer AIE economist Phillips -- -- thank you for being with us looked -- this Wal-Mart commentary bothering you do you think it you know basically -- to trend over the entire country.
Chairman of -- the -- you know as a warning sign and Wal-Mart is a canary in the coal mine.
That when consumers took a hit from the higher payroll tax consumers people spend money Wal-Mart.
A pullback we we see now higher gas prices as well we'll hit consumers -- is a 12.
I I think he's going to be temporary the job market is still improving it is is looking good but is definitely a I danger.
Do you what do you know it glad you don't put reliance on the luxury and we were talking earlier that luxury sales are still doing okay.
King we will rely on the luxury consumer didn't pick up the slack.
You know -- And -- the high end is doing better I don't think there's enough there to really drive the economy and we need broad based consumption.
We need broad base spending by businesses equipment and software.
And that that's really waiting for resolution of the uncertainty here in Washington.
So let's talk about this -- -- now here we are again the sequester coming up.
Possibly going to -- -- we get all these spending cuts that's less money isn't it.
It you know it is an irony of by the White House statement that you read it is that the president hasn't put border realistic proposal so.
So yes that we don't want the budget cuts we don't want the spending cuts but we have to have something else to address the fiscal danger.
And this is the White House is really standing silent yeah -- And you know one of the things we did hear out of the White House is this increase in -- minimum wage.
Be your sanity into the -- to -- hurt both low skilled workers is -- Yeah I you know most people on -- annual wage are not the primary bread earner earners.
I'm still hire -- -- to help teenagers mostly you know priced -- low skilled workers the job market.
You know look at that the health care taxes that you mentioned before there's another impediment to job creation is more money out of people's pockets.
It's pathetic really interesting that you say if you look gonna help increase the earned income tax credit and I think that things should be abolished altogether mean why -- we people why -- we want to keep given out hand out.
Yeah I mean that if you see they earned income tax credit.
-- encourages work so says to people with low low skills low wages.
You get in the workforce you work and you we will make it more worthwhile so it encourages the right things encourages people to work.
You only get paid if you do work.
And -- -- on getting people into the labor market we get them up the latter skills it.
It and -- their way to it also encourages them to stop working at a certain point to right because once they -- a certain income level they no longer qualify for.
Yeah absolutely there's a phase out -- -- of that withdraw all the benefit.
Is kind of like attacks and that's a danger.
I think the most important thing is getting people there to work in getting people back into the labor force and that's -- -- the Yankees.
And a lot to think that an attack failure rate of thank you so much for being with us that you rate -- -- people who work because they want to wanna work to history.
