Concern that U.S. personal income taxes will increase next year caused an unexpected decline in consumer confidence in September, indicating the biggest part of the economy will struggle to pick up. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to a one-year low of 66.6, figures showed yesterday. The decrease was due entirely to a rise in pessimism was among households with incomes above $75,000, the group said.
A separate report from the Federal Reserve showed household wealth declined 2.8 percent in the second quarter as stock prices fell. While lawmakers have said they plan to extend the George W. Bush-era tax cuts for the middle class, they’re at odds about whether to continue them for wealthier Americans. The delay in achieving passage prompted declines in the higher income group’s views this month about personal finance, buying plans and prospects for the economy. “Just not knowing whether you’ll get hit with a big tax hike is a huge negative,” said Nariman Behravesh, chief economist at IHS Inc., a consulting firm in Lexington, Massachusetts. “The delay and the uncertainty are dangerous.” Congress and the president “are playing with fire.” Read more here:
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