The increase in the payroll tax that took effect as the result of the Fiscal Cliff negotiations at the beginning of this year had many people worried that it would limit Americans' purchasing power. So far, thankfully, there has been little evidence of that. The Commerce Department said yesterday that sales at U.S. retailers jumped by 1.1 percent in February, the biggest increase in five months.
That was far ahead of expectations. Not a single one of the economists surveyed by Bloomberg News projected that February would see such strong retail sales growth. One big factor was car sales: Ford reported that deliveries were up 9.3 percent, for its strongest February in six years, while GM's were up 7.2 percent.
All that activity has caused some people to reassess their view of the strength of the American economy. J.P. Morgan has raised its forecast for first-quarter GDP growth from 1.5 percent to 2.5 percent; Deutsche Bank raised its from 1.5 percent to 3 percent.
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