Because of how huge Wal-Mart really is, economic analysts like to pay very close attention to Wal-Mart sales revenues. Wal-Mart sales revenues are used as an indicator of consumer spending and also the health of the economy. Many sales reports coming from leading retailers have been meeting expectations. Sales reports will show there is more hiring, paying, and a lot more hours to work. Wal-Mart's sales revenues are down, while Target's sales revenues are up. But officials from both of the companies are saying that the consumer comeback that many are hoping will drive the U.S. economic recovery from the Great Recession may not be sustainable.
Source for this article: Wal-Mart sales revenue clouds U.S. economic recovery predictions
Wal-Mart sales report
In a normal week, Wal-Mart has around 100 million shoppers. Shoppers spending their additional cash generate a lot more than $ 400 billion in annual sales. CNNMoney.com reports the Wal-Mart sales report actually shows revenues worldwide rose 6 percent to $ 99.1 billion, which beat analysts' forecasts of $ 98.45 billion. Sales at Wal-Mart stores open at least a year -- a key metric of retail performance called same-store sales -- fell 1.4 percent within the 3 months that ended April 30. Same-store sales rose 3.6 percent in the same period a year ago. A 1.6 percent decline in the fourth quarter is what these sales are following.
Wal-Mart 2010 sales revenues
The fourth quarter of dragging US sales were reported by Wal-Mart sales report logs. The Wall Street Journal reports that Wal-Mart predicted that its U.S. sales would continue to be sluggish this summer when taking into account the working-class customers who form Wal-Mart's base still reel from the effects of the recession on their finances. Rising gas prices and unemployment heading to the summer cloud the Wal-Mart customer’s outlook even more.
Target and their sales revenues
The contrast in sales revenues between Target and Wal-Mart say something about US economic recovery in 2010. Target, as the Wal-Mart rival, reported a 29 percent increase within the first quarter of their income. The Associated Press reports that Target's rising sales revenues are a huge sign that the retail chain is drawing a ton of customers away from competitors like Wal-Mart. However, during a conference call to investors, Target Chairman and CEO Gregg Steinhafel said "Clearly, the economy and consumer sentiment have improved given that the weakest point in 2009, but we believe that both are nevertheless somewhat unstable and fragile and will likely continue to experience occasional setbacks as the year progresses amid a stubbornly high jobless rate.".
2010 US economic recovery
Target, which has managed to brand itself as a Wal-Mart-type discounter with just a little bit of style thrown in, took a hit during the Great Recession. During the recession, Wal-Mart’s sales actually rose given that Americans with little money left supermarkets and department store to shop at Wal-Mart. As the economy gets better, Wal-Mart is losing its customers that it had won during that huge downturn. Numerous of those customers have apparently been taking baby steps to Target.
Predictions for US economic recovery
For the US economic recovery to be sustainable, Wal-Mart might have to pull out their wallets. The CNNMoney.com article makes a note that retail sales expanded over the last seven months because around 40 percent of current spending comes from 20 percent of the highest incomes. Also, because of events like the stock market Flash Crash and European debt crisis, the rate of the retail sales increases fueled by some households has slowed given that March.
Strange, long US recovery
For Wal-Mart to shore up the sputtering economic recovery, they'll need a lot more work and a lot more money. The U.S. unemployment rate stuck at nearly 10 percent, the underemployment rate is increasing, wages decline for people who can discover work and inflation-adjusted income is flat. With the current rate of economic growth it will take at least three years to bring the unemployment rate down to be below 6.3 percent, where it was at the peak of the 2001 recession.
Headwinds US economic recovery
Wal-Mart's troubles, the retail sector's outlook and also the health of the economy at large are facing what Sandra Pianalto, the president of the Federal Reserve Bank of Cleveland, calls a "powerful headwind." As reported in the Washington Independent, Pianalto said a heightened sense of caution is driven by uncertainty that the standard of living Americans had become accustomed to will return. Those who started their careers in the mid-1980s have experienced mostly prosperity with the exception of two very brief downturns. Expectations have shifted quite a bit due to this long and deep recession.
Additional data at these websites
Wall Street Journal reports
Associated Press reports
As reported in The Washington Independent