by Calculated Risk on 2/07/2013 09:00:00 PM

As expected, the payroll tax increase is impacting consumers, from the WSJ: Tax Holiday Ends, Consumers Scrimp

Some early signs suggest [consumers] are tapping the brakes. Surveys show the majority of Americans who are aware of the tax increase say they plan to cut spending, and consumer confidence has wavered. Companies like Target Corp. and women's clothier Cato Corp. say the tax increase has crimped sales.

And from Mark Thoma at EconomistsView: Fed Worried about Bubbles, Not Inflation

With fiscal policy moving in the wrong direction -- deficit reduction rather than employment enhancing stimulus, e.g. infrastructure -- if monetary policymakers begin getting skittish, then the unemployed will lose the one institution that seemed to actually care about their struggles. Not good.

A little less fiscal austerity now - or even some more fiscal stimulus - would take some pressure off of monetary policy.  But that doesn't seem likely.

Friday economic releases:
• At 8:30 AM ET, The Trade Balance report for December will be released. The consensus is for the U.S. trade deficit to decrease to $46.0 billion in December from $48.7 billion in November.

• At 10:00 AM, Monthly Wholesale Trade: Sales and Inventories for December. The consensus is for a 0.3% increase in inventories.