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Rising home prices and steady job growth have helped offset some of the impact of the tax increase. Employers added 175,000 jobs in April. That almost exactly matched the average increase of the previous 12 months: 172,000. Consumers increased their spending from January through March at the fastest pace in more than two years. However, they had to trim the pace of their savings to finance their purchases. After-tax income dropped at an annual rate of 7.5 percent in the first quarter. That drop reflected in part the increase in Social Security taxes that took effect on Jan. 1. A person earning $50,000 a year will have about $1,000 less to spend this year. A household with two highly paid workers will have up to $4,500 less. The overall economy grew at an annual rate of 2.4 percent in the January-March quarter. The expectation is that growth is slowing in the April-June quarter to 2 percent or less. The Federal Reserve's borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.
[Associated
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