He argued that the recent economic reports support this view. Even though some numbers — Hatzius cited jobless claims, automobile and retail sales, and the latest manufacturing surveys — may indicate that momentum is already building, he noted that the firm’s broader current activity indicator has slumped from 2 percent in the fourth quarter to 1 percent in January.
While strong consumer data for January did not exactly fit with this slow-growth view, Hatzius chalked it up to the fact that most consumers were not aware of how great the recent hike in the payroll tax would have on their disposable income until they received their mid-January paychecks. The end of the payroll tax holiday — which came about as a result of the compromise made by Congress to avoid the fiscal cliff — returned the tax that funds Social Security back to 6.2 percent. The tax was lowered to a rate of 4.2 percent back in 2008 when the economy first started crumbling.
Here he gave a nod to Wal-Mart (NYSE:WMT), which is experiencing very poor sales this month. In a series of emails leaked to Bloomberg on Friday, Wal-Mart’s vice president of finance and logistics, Jerry Murray, called February sales a “total disaster.” The retailer attributed the horrible sales to the increase in the payroll tax. In the email, Murray asked, “Where are all the customers?” and “where’s their money?”