The tax cut that was supposed to help the economy has made little impact in January. Consumers did not increase their spending as much as economists were predicting.
A Social Security tax cut that economists say should help the economy this year is off to a slow start. Consumers increased their spending last month at the weakest pace since June, even with the extra money in their paychecks.
Some people may be using the additional money to pay down holiday credit card bills or higher gas prices, analysts said. And harsh weather may have deterred some people from shopping in January.
Personal finance experts say the real test of the tax cuts impact will come this spring, when the Easter holiday sales begin.
Still, consumers increased spending by only 0.2 percent in January, the smallest gain since June, the Commerce Department said Monday. At the same time, their incomes rose 1 percent — the biggest jump in nearly two years and a reflection of the tax cut.
The increased income is part of an… continue reading
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