Payroll taxes take a bite out of retail sales

Of all of the elements of the US fiscal cliff, the most damaging from a consumer perspective is likely to be the increase in payroll taxes as it hits a broad swathe of consumers in the middle class. This was confirmed today via the release of retail sales data at 830 ET, which showed retail sales inching up ever so slightly in January from the month before.
Retail sales rose 0.1% in January versus the 0.5% increase in December. Excluding the volatile food and energy energy components showed a 0.1% increase versus December's 0.7% increase. And this was in the first month of the payroll tax effect. By contrast, consumer spending grew at a 2.2% annualised rate in Q4 2012. And sales are up 4.7% compared to January 2012.
I anticipate that retail sales will fall  as the impact of the increased...

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