Browsing through an aisle of neon green, pink and transparent plastic storage containers at a Target Corp. store in Washington, Phipps, who works for the Justice Department, said the payroll tax increase hasn’t altered his spending habits.
Tax Impact
“I didn’t really pay any attention to it,” he said. “I can’t say I had any particular, ‘oh no, I’m not going to do X, Y and Z thing.’”
Americans are opening their wallets for bigger-ticket purchases too. General Motors Co. and Ford Motor Co. predict automobile sales, on pace for the best year since 2007, will remain resilient. Cars and light trucks sold at a 15.3 million annual rate in February after 15.2 million a month earlier, according to Ward’s Automotive Group.
“Consumers appear to be taking higher payroll taxes in stride, at least when it comes to replacing older vehicles,” Kurt McNeil, vice president of U.S. sales operations for Detroit-based GM, said on a March 1 conference call.
Furniture Sales
Norris Home Furnishings, a Fort Myers, Florida-based furniture retailer with three stores, exceeded its goal for 15 percent sales gains in January and February from a year earlier, company owner Larry Norris said. Rising home prices in the region have improved consumer attitudes even in the face of higher taxes, the 70-year-old business owner said.
“People are a lot more cautious with their money than they were at one time, but they are still spending,” he said. “Consumer attitudes are improving, no question.”
Retailers Gap Inc. and Limited Brands Inc. each reported sales at stores open at least a year rose 3 percent in February, exceeding analysts’ forecasts. Gap also owns the Banana Republic and Old Navy store chains, while Limited’s brands include Victoria’s Secret. Costco Wholesale Corp., the largest U.S. warehouse-club chain, reported a 6 percent jump that also topped analyst estimates.
The improving sales outlook is encouraging businesses to expand and add workers. Lowe’s Cos., the second-largest U.S. home-improvement retailer, is boosting spending on store upgrades and hiring. The Mooresville, North Carolina-based company said it plans to open 10 stores in 2013.