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