Economists Warn Tax Hikes Could Cause Consumer Spending to Drop by as Much as $200 Billion in 2013
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(firmenpresse) - NEW YORK, NY -- (Marketwire) -- 11/28/12 -- U.S. markets slumped Monday as White House economists warned that the uncertainty of tax hikes, a result of the upcoming "fiscal cliff," for middle class taxpayers could cause a steep drop in consumer spending in 2013. On Monday, 9 of the 10 groups in the S&P Index fell. The Paragon Report examines investing opportunities in the S&P 500 Index and provides equity research on ConAgra Foods, Inc. (NYSE: CAG) and Wal-Mart Stores, Inc. (NYSE: WMT).
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According to a study by President Barack Obama's National Economic Council and his Council of Economic Advisers a sudden tax increase for middle-income taxpayers could see consumer spending drop by nearly $200 billion next year. Data from the study showed a typical family of four (a married couple with two children) earning between $50,000 and $85,000 would pay an extra $2,200 in taxes. The Congressional Budget Office has recently stated that if the U.S. is unable to avoid the fiscal cliff it could face a recession and see the unemployment rate rise to roughly 9 percent.
"There's the backdrop of what's going on in the European Union with the bailouts and recapitalizing the banks. On top of that, we have issues in the U.S. with regard to our fiscal policy. That's just enough reason at this point in time to take risk off the table and wait for more insight and clarity," said Peter Sorrentino of Huntington Asset Advisors.
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ConAgra Foods is one of North America's leading food companies, with brands in 97 percent of America's households. Shares of the company surged Tuesday after it had reported it plans to purchase Ralcorp Holdings, Inc. for $90.00 per share in cash. The deal creates one of the largest packaged food companies in North America, with sales of approximately $18 billion annually.
Wal-Mart recently announced that it has decided to make its fourth-quarter dividend payment on December 27, 2012 instead of January 2, 2013. The company currently offers investors an annual dividend of $1.59 per share for a yield of roughly 2.27 percent. Shares of Wal-Mart have gained over 12 percent year-to-date.
The Paragon Report has not been compensated by any of the above-mentioned publicly traded companies. Paragon Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at:
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Datum: 28.11.2012 - 13:20 Uhr
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