emotion vs. reason

The stock market's gains seem emotional to me. I know optimism is good. "Think positive" is a popular theme. We are positive going into a new year. We should be. Our journey through an ever-changing economic landscape is just beginning. Not every dollar going through our economy goes through Wall Street. But the Wall Street click has a good pulse on what consumers are doing. The market optimism has gained after the fiscal cliff drama has closed.

But what is really coming down the middle-class economy staircase?

We are going to be taxed more. The employee portion of Social Security tax withholding goes up to 6.2% from 4.2% on January 1, 2013.  Employers have until February 15th to make the change from the previous rate, but the IRS bulletin on the topic instructs employers to make up any difference due from late adoption by March 31, 2013.

Approximately 79.1% of all U.S. households make less than $100,000 and are therefore subject to the entire impact of the Social Security tax. How much less will these households be taking home? Assuming a household makes $50,000 per year, that's $1,000.

Companies that rely on the middle-class consumer are going to face new challenges. However these challenges are going to exhibited in the market when they hit home, not before. After all, we're having too good a time.

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