Earning More But Spending Less: Consumerism Tightens as the Economy Grows
The stock market has reached historically high levels, unemployment rates are at an all-time low, and educational achievements and job approval are skyrocketing. Despite the most successful sustained growth in the economy since the 2008 recession, consumers remain resistant to reinvestment in the retail market, and it may be due to an unreliable past. This year alone, retail sales have decreased by $1.8 billion. Spending on gasoline, electronics, appliances and general merchandise has seen an approximate 2% decline. Motor vehicle sales have plummeted. Consumers are avoiding major purchases at retail outlets and opting to prepare meals at home rather than dining in restaurants. Although it is unknown why consumers are spending less, retailers speculate that the drop in spending has more to do with the recent payroll tax increase and less to do with the state of the economy.
Not all markets are in despair, however. A report generated by the Commerce Department reflected a sharp rise in real estate purchases and housing-related spending. Consumers appear to be more comfortable spending on their homes and less so on unreliable retail purchases such as vehicles and electronics.
Regardless of these trends, retailers expect to see sales pick up over the next few months, particularly entering the spring season, as consumers learn to manage their smaller take-home income.
TaxTime Brings about Skepticism, Scammers and Identity Theft
Without fail, every year beginning in January and continuing on through April, taxpayers rush to file their tax returns in the hope of receiving that long-awaited refund check. Many Americans rely on this refund check to pay bills, buy basic necessities or to save for future expenses. However, every year, thousands of Americans receive notification from the IRS that their returns have been rejected. A common reason for the rejection is identity theft.
The crime is simple: scammers steal the taxpayer’s identification, file a phony tax return and receive a check or deposit for the taxpayer’s refund, all while the taxpayer is unaware. When the taxpayer later files his/her tax return, the IRS rejects the return. In 2012 alone, approximately 650,000 Americans received rejected tax return notices due to this scam. And, since electronic filing and automatic deposits have made filing taxes easier than ever, the numbers are quickly rising.
For those taxpayers who have been scammed, reissuance of a refund check will not be easy. Although the IRS has created an identity fraud department to investigate tax crimes, it may still take six months just for the IRS to perform an investigation. Additionally, many tax refund fraud victims are also victims of other types of identity fraud.
The Manhattan District Attorney’s Office stated that they investigate approximately 300 new identity theft cases each month. With cyber crimes at an all-time high, growing substantially as technology evolves, this problem becomes increasingly more significant and, unfortunately, more common.
The Importance of Keeping Your Zip Code Under Wraps
Ever wonder why you receive coupons, magazines or advertisements mailed to your home, which appear to be closely, and almost eerily, related to your lifestyle? A new study has shown that each time a consumer willingly provides their zip code at the check-out counter, data companies and other retailers are permitted to track everything from their body size to their bad habits.
Five-digit zip codes give you more than a Google search. Your zip code enables companies to know your marital status, whether you are purchasing or selling real estate, if you smoke cigarettes and even the ages of your children. These companies then target specific consumers for their products in an attempt to increase sales. But, consumers are being tracked without their knowledge. And, companies are predicting what you plan to do next—storing information including political affiliations, educational background, income level and more.
Providing your zip code at the check-out counter is now as safe as posting a picture on Facebook. The Federal Trade Commission only requires information used for credit, employment, insurance, health or housing to be kept private. So, the next time you make a purchase and the cashier asks for your zip code, you may want to think twice; unless you want your clothing size and child’s diaper brand made public.
Prepared by Leah A. Costanzo