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"We're seeing the effect (of the payroll tax hike) on the consumer," said CEO Bob Sasser, "but we think we're part of the solution and a destination for a cash-strapped consumer who's trying to balance their budget." Discount retailer stocks are rising. The TJX Cos. Inc., operator of T.J. Maxx and Marshalls, is up 6 percent this year, Ross Stores Inc. 7.5 percent and Stein Mart Inc. 16.6 percent. Wal-Mart is up nearly 4 percent since its earnings announcement on Feb. 21, while Burger King has gained more than 9 percent since it unveiled results on Feb. 15. Like the mid-range retailers and restaurants that can blame their woes on tax policy, lower-end stores may be trumpeting its benefits to them too hastily, says Joesph LaVorgna, chief U.S. economist at Deutsche Bank Securities. "We don't know much about the first quarter," he said, and retail sales data for recent months have been revised upwards. The tax hike will inevitably hurt consumers in the first quarter, he said, "but that doesn't mean consumer spending is necessarily going to be weak." Consumers could keep spending and save less money. The job market is improving and so is the housing market. LaVorgna noted that people have continued to buy more expensive items like cars and trucks, a trend that "seems to run counter to the payroll tax hype, blaming it for all the problems." In general, economists say, the picture is far more complicated than a small reduction in take-home pay. People may be saving for biggest expenses while cutting back on items typically considered staples. In its earnings announcement, Home Depot said sales were strongest of items that cost $900 or more
-- hardly the marginal purchases that mid-level restaurant chains must worry about, says Brian Sozzi, a retail industry analyst with NBG Productions. The company also did brisk business in flooring, a product set that tends to track renovation activity, a broad driver of spending. There's no reason to believe the companies are being dishonest about why sales may have weakened. But focusing on the payroll tax, a political hot-button, may be a red herring. "This might be bad for some companies and very good for others," Greenhaus says. Which companies fall into which group, he said, won't be clear for a few more months.
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