White House Economists Warn Tax Implications, Shoppers Swarm Retail Stores

Nichole Harper
26 Nov, 2012
New York City

Stocks in New York traded lower after economists warned that a sudden increase in taxes next year could reduce consumer spending by $200 billion. Retailers reported surge in holiday shoppers as discounts and early hours drove consumers to stores.

[R]11:35 AM New York – Stocks in New York traded lower after economists warned that a sudden increase in taxes next year could reduce consumer spending by $200 billion. Retailers reported surge in holiday shoppers as discounts and early hours drove consumers to stores.[/R]

Stocks in New York opened lower after White House economists warned the negative impact of sudden increase in tax for middle-income tax payers.

The S&P 500 index decreased 0.5% or 6.59 to 1,402.56 and the Nasdaq decreased 0.08% or 2.63 to 2,964.24.

National Economic Council and Council of Economic Advisers noted that a one-time increase in taxes for middle-income taxpayers may lead to lower consumer spending by as much as $200 billion.

Markets in Europe edged lower across the region as euro zone ministers gather with the IMF and the officials at the European Central Bank to determine when to release the next tranche of bailout fund to Greece.

Oil traded lower in New York and the immediate month delivery future fetched $85.56.

The National Retail Federation said 247 million shoppers looked for deals at stores or online during the Thanksgiving holiday, an increase of 9.2% from a year ago.

Extended hours and early opening on Thursday and Friday helped several large chains to attract buyers.

Customers spent an average of $423 last weekend compared to $398 last year, according to the NRF survey.

Cyber Monday, is expected to ramp up total sale of $1.5 billion in e-commerce sales, record for the Monday after Thanksgiving holiday.

ComScore Inc, the Internet data and traffic tracking firm, said e-commerce sales on Friday reached $1.04 billion, an increase of 26% from a year ago.

McGraw-Hill agreed to sell its education division including digital and traditional text books to private equity firm Apollo Global Management for $2.5 billion.

Apollo will pay 8.5% interest rate on $250 million in senior debt issued to McGraw Hill.

The sale is expected to close by the end of 2012 or early 2013 and soon to be named McGraw Hill Financial plans to buy back stocks, pay off debt and make acquisitions and focus on brands like Standard & Poor’s, S&P Capital IQ and J.D. Power and Associates.