Wal-Mart concerned about the economy
And if they are concerned, I'm concerned. From
The Washington Post:
Wal-Mart�s freaking out about the economy. Should the rest of us?
�Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where�s their money?�
On Friday, Bloomberg published a couple of internal e-mails from Wal-Mart executives panicking about the company�s worst sales start in seven years � �a total disaster,� as one put it. The execs attributed Wal-Mart�s slump to the payroll tax hike that kicked in on Jan. 1, cutting the median family�s take-home pay by about $1,000 this year.
So if Wal-Mart is struggling, does that mean everyone else should worry? There are two ways to look at this. The first is that this is a terrible omen. Wal-Mart makes up such a huge chunk of the U.S. economy � 2.3 percent of GDP in 2006 � that many analysts look to it as a key bellwether. Matt Stoller wrote an excellent post last year on this topic:Because of its scale and remarkable amount of data, the company actually has more granular data about the economy than most macro-economic forecasters. As Fed Board Governor Randall Kroszner said in a June 2006 meeting, Walmart officials �effectively know what retail sales are before the numbers are reported because their sales are so highly correlated with overall retail sales.�
Stoller combed through transcripts of meetings from the Federal Open Market Committee over the years and found that Wal-Mart was often warning about signs of trouble in the economy long before anyone else:In 2004, Walmart began warning of high energy prices, and that consumers were �liquidity-constrained�. The company saw in its sales figures that consumers were increasingly living paycheck to paycheck. In 2005, the company began worrying about a �strange� situation � the consumer was tapped out, but sales were up and Walmart couldn�t figure out why. This was a hint of the credit bubble, but the Fed ignored it.
In other words, pay attention to Wal-Mart. They often know something the rest of us don�t.
Times are going to get worse before they get better. Time to hunker down and conserve resources.
Posted by DaveH at February 19, 2013 6:02 PM