WASHINGTON — With higher payroll taxes starting to kick in, retail sales rose in January at their smallest rate in three months. Consumers pulled back a bit on their purchases of cars, clothes and home furnishings, the government said Wednesday.
Overall, retail sales ticked up a modest 0.1 percent last month from December, after gains of 0.5 percent in each of the prior two months. The subdued January performance was in line with consensus forecasts, as many analysts were expecting a drop-off in the growth rate after the expiration of the payroll tax holiday, which translates to about $40 less in take-home pay for the average worker every two weeks.
Still, given the bigger bite in payroll taxes and higher income taxes for the wealthy, plus the recent jump in gas prices, some economists found it encouraging that there was any growth at all in retail sales last month.
"There is no clear signal yet of a broad-based pullback in spending on the back of the tax hikes," said Peter Newland, an analyst at Barclays Bank.