In an April 7th post regarding the causes of March unemployment, I said the following:
First let’s dispose of the most egregious canard – that the low job creation number for March was caused by the sequester. In fact, it had nothing to do with the sequester.
One of the key drivers in BLS’s low job creation figure was the national loss of 24,000 jobs in the retail sector. This is more easily traced to the quiet January increase in Social Security taxes, which reduced take-home pay for hard-pressed, middle class Americans, who in turn, spend less at the store. The tax increase, not the sequester.”
Evidence of this fact came only days later.
On April 11th, the government reported on retail sales for March, which fell – unexpectedly. The summary below from the New York Times.
“Retail sales declined a seasonally adjusted 0.4 percent last month, compared with February, the Commerce Department said on Friday. That followed a 1 percent gain in February and a 0.1 percent decline in January. The figures for February and January were both revised lower from initial reports.
Consumers cut back spending across a wide range of categories last month. Sales at auto dealers dropped 0.6 percent…Department stores, electronics retailers and sporting goods outlets all reported lower sales…The retail sales report is the government’s first look at consumer spending, which drives about 70 percent of economic activity….The decline in March shows that higher Social Security taxes are starting to affect consumers and could blunt growth in the spring.”
Reduced sales translates into reduced retail hiring. Both caused by a tax increase that bit into consumer disposable income.
Read beyond the headlines and remember, “truth has no agenda.”