Feldstein: contracting Q4 GDP and now consumers face higher payroll taxes

Martin Feldstein, Harvard University economics professor, provides an outlook for jobs and economic growth in 2013, and explains why he believes the Fed’s policies are taking a dangerous direction:

“I’ve been saying this past year, we’re going to be lucky if we get to 2% real GDP growth. A lot of people talking about numbers 3, 3 plus in 2012. Now, at least we have official numbers for all four quarters and we’re far short of 2%. Far short of 2% for final sales and the consumer is still keeping up consumer spending by a relatively low level of savings. Now, the consumer will get hit with higher payroll taxes and hard to see how consumption will continue to strengthen the economy in 2013.”

Here is a direct link.

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4 Responses to Feldstein: contracting Q4 GDP and now consumers face higher payroll taxes

  1. Roberta says:

    I’m very happy to pay higher payroll taxes if it means I will have a check in old age. There will be no check coming from my employer, nor from my wall street investments. It’s either SS or nothing. Same for the majority of baby boomers. I wish they’d raise the payroll tax ANOTHER 2%. THAT would give people at least SOME confidence in the future.

  2. mommybomm says:

    The payroll tax never should have been touched in the first place. Big mistake only taken in in desperation to jiggy up retail coffers. Notice how employers were not relieved of their ‘half’ of payroll tax contributions? Now Soc Sec will just go broker faster. The game is so totally rigged. On Medicare, get yourself disabled and beat the weasels to the meat before its all gone, or worse ‘reduced benefits due to the Third Person at the table….government employees making decisions on your behalf???? Good grief….Bill Gross summed it up quite nicely. Go to New Zealand or some nice place and enjoy what you have while you still have the health.

  3. William says:

    The FED DOES NOT set interest rates, “Mr. Market” DOES. Yes, the FED has helped to push rates lower by buying about 1/3 of bonds with a duration of over 20 years. Guess what happens when the would stop buying T-bonds and after that even starts selling those bonds.

    Yes, interest rates WILL go higher but not as a result of inflation. Never heard of “Deflation” ? Never heard of the “US defaulting on its debts” ?

  4. Robert says:

    Ponzi schemes don’t pay off to late “investors”.

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