So far, most of tax cut is going down the gas tank

Americans are earning and spending more, but a lot of the extra money is going down their gas tanks. Gas prices have drained more than half the extra cash Americans are getting this year from a ...

Americans are earning and spending more, but a lot of the extra money is going down their gas tanks. Gas prices have drained more than half the extra cash Americans are getting this year from a cut in Social Security taxes.

Unlike some other kinds of spending, paying more for gas doesn't help the economy much. Most of the money goes overseas, and higher prices leave people with less money to buy appliances, computers, plane tickets and other things that can be postponed.

"When food and gasoline prices are rising, it causes people to hunker down," said Chris G. Christopher Jr., senior economist at IHS Global Insight.

Consumer spending jumped 0.7 percent last month, and personal incomes rose 0.3 percent, the Commerce Department said Monday. Both gains reflected the cut of two percentage points in the Social Security tax, raising take-home pay.

They also illustrated how higher gas prices are stressing household budgets. After adjusting for inflation, spending rose just 0.3 percent. After-tax incomes actually fell 0.1 percent.

The Social Security tax cut will give most households an additional $1,000 to $2,000 this year. In December, when President Barack Obama signed it into law, economists predicted higher take-home pay would lead to more spending and stronger economic growth.

But gas prices have jumped more than 50 cents a gallon this year. In late December, they hit $3 a gallon for the first time in two years. Last week, they averaged $3.58 nationwide, according to AAA's daily fuel gauge survey.

Mark Zandi, chief economist at Moody's Analytics, has reduced his forecast for 2011 economic growth from 3.9 percent to 3.5 percent, in part because of gas prices. That would still be better than last year's 2.9 percent growth and the biggest expansion since before the recession.

Still, much of the anticipated benefit from the tax cut will be lost. Christopher estimates half to two-thirds of the extra cash will ultimately go toward higher gas prices. Food prices have also risen in recent months, he noted.

Higher gas prices generally don't help the broader U.S. economy, even though they force people to spend more. The additional money seldom pays for higher salaries or new jobs. The United States does supply a portion of the oil consumed here. But the majority is produced overseas, so most of the money leaves the country.

Most people don't have the luxury of deciding to buy less fuel. They have to get to work. So they spend more on gas, and less on other goods and services — from household purchases to restaurant meals to vacations — that do more to drive U.S. economic growth.

Those purchasing decisions are critical for the economy because consumer spending accounts for 70 percent of growth.

There's also a psychological factor when gas prices, a consumer necessity, keep rising. Those higher prices tend to rattle consumer confidence. People feel poorer, and they're less likely to spend freely.

Ultimately, less spending can hurt job growth because businesses will feel less confident. Christopher said a rise of just 25 cents a gallon in gasoline prices, if it persisted for an entire year, could cost the economy 270,000 jobs.

It's probably too early for the impact of higher gas prices to show up in national employment figures. The economy added 192,000 jobs in February. The consensus estimate of analysts is that it added 185,000 in March.

People made big purchases in February. Spending on durable goods rose 1.7 percent, much of it from new cars. And though the housing market had its worst year in a decade last year, the National Association of Realtors says more people signed contracts to buy homes in February than in January.

Still, economists are lowering expectations for the January-to-March quarter. Paul Dales, senior U.S. economist at Capital Economics, said consumer spending will likely grow only 2 percent to 2.5 percent in that stretch. That would be down sharply from the 4 percent increase in consumer spending in the October-December period, the fastest pace in four years.

The big rise in spending and smaller increase in incomes pushed the household savings rate down to 5.8 percent of after-tax incomes last month. That compared with 6.1 percent in January.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said he doesn't expect food and energy prices to keep rising sharply.

"I expect these strongly accelerating upward movements of commodity prices to be short-lived," Lockhart said in a speech Monday in Atlanta.

___

AP Real Estate Writer Derek Kravitz and Economics Writer Jeannine Aversa contributed to this report.

In Other News

fake money

Keywords clouds text link 

Dịch vụ seo, Dịch vụ seo nhanh , Thiết kế website ,  máy sấy   thịt bò mỹ  thành lập doanh nghiệp
Visunhomegương trang trí  nội thất  cửa kính cường lực  Vinhomes Grand Park  lắp camera Song Phát thiết kế nhà thegioinhaxuong.net/

Our PBN System:  thiết kế nhà xưởng thiết kế nội thất thiết kế nhà tem chống giả

aviatorsgame.com ban nhạcconfirmationbiased.com 
radiantcitymovie.comeatatdistrict.com
chaletedelweiss.useve-razor.com
occastudios.commoscasenlasopa.net
skaratoken.comshowdx.com
thelettersmovie.comheritage-gifts.com
singstreetmovie.comdeadaccountsonbroadway.com
moscasenlasopa.netratchasima.net
eatatdistrict.comthe-movie-trailer.com 
theboroughraleigh.comradio-electronics.co
mariankihogo.com  ốp lưngGiường ngủ triệu gia  Ku bet ku casino

https://maysayhaitan.com/  https://dovevn.com/ buy fake money https://sgnexpress.vn/ máy sấy buồn sấy lạnh

mặt nạ  mặt nạ ngủ  Mặt nạ môi mặt nạ bùn mặt nạ kem mặt nạ bột mặt nạ tẩy tế bào chết  mặt nạ đất sét mặt nạ giấy mặt nạ dưỡng mặt nạ đắp mặt  mặt nạ trị mụn
mặt nạ tế bào gốc mặt nạ trị nám tem chống giả

https://galaxymedia.vn/  công ty tổ chức sự kiện tổ chức sự kiện
Ku bet ku casino
Sâm tươi hàn quốc trần thạch cao trần thạch cao đẹp

suất ăn công nghiệpcung cấp suất ăn công nghiệp

https://docs-cashshop.com/
https://galaxymedia.vn/dich-vu-to-chuc-su-kien-la-gi-quy-trinh-to-chuc-su-kien-nhu-the-nao-id3108.html

© 2020 US News. All Rights Reserved.