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Retail sales improved in February, but not among those hit hardest by 6.2 percent payroll tax

The stock market is soaring. Unemployment is down. More houses are being built.

Happy shopperAnd today Uncle Sam reported that we're spending more at stores. 

The economy's back, baby!

Not so fast.

Yes, Department of Commerce data show that retail sales in February were stronger than anticipated.

Total sales last month were up 1.1 percent over the January numbers and were 4.6 percent higher than in February 2012. Those numbers were substantially better than projections of a 0.5 percent monthly increase and a 0.2 percent annual improvement.

But there's a definite divide in recent spending patterns.

"The things you'd expect the well-to-do to spend on which is housing and automobiles have all gone up dramatically," says Dan Alpert, founder and managing partner of Westwood Capital.

Alpert says that a closer look at the data shows declines in spending on things that might be affected by the return of the 6.2 percent rate of payroll tax withholding.

Food services and bars dropped 0.7 percent compared to January. Home furnishing dropped 1.6 percent and electronics and appliances were off 0.2 percent.

True, these aren't dramatic spending drops. But they are in product areas that might cause second thoughts about buying among folks who must watch their income and spending closely.

By losing some of their discretionary income in January when the 2 percentage point payroll tax holiday expired, these folks -- which are most of us -- appear, based on the February numbers, to be pulling back on expenditures.

Now that we're two and a half months into the regular 6.2 percent payroll tax collection, has it changed how you manage your money?

Has the return of the 6.2 percent payroll affected your spending?
Yes, I'm spending less.
No, I'm spending more.
My spending is the same as it was when the payroll tax rate was 4.2 percent.

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Kelly Boros

Businesses should pull reports and compare this year so far over last year to see if anything is trending downward. If certain products or services are seeing a dip in sales, perhaps they need to increase promotional activity, or scale back and focus on more profitable areas that are performing well.

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