America’s Economic Recovery at Risk as Consumers Start Pulling Ba
The tax increases and lack of wage increases appear to be impacting America; for a country needing to see its gross domestic product (GDP) expand, this is not what you want to hear.
Of course, sluggish consumer spending and GDP growth may also force the Fed to refrain from cutting its bond stimulus too quickly.
In my previous commentary, I talked about the lack of revenue growth in corporate America.
We are now seeing soft reports and guidance from major retailers across the nation. Simply consumer spending has been impacted by the tax increases and the lack of jobs growth and wage increases across the country. The lack of consumer spending is even more startling given the low interest rates available for financing purchases. If you’re not worried, you should be.
Wal-Mart Stores, Inc. (NYSE/WM), the bellwether of retailing in the United States and the world, released a report and consumer spending assessment that was dismal. The discounter said its key comparable store sales in the U.S. contracted 0.3% for the 13 weeks to July 26. (Source: d’Innocenzio, A., “Wal-Mart cuts profit outlook on shopper worries,” Yahoo! Finance, August 15, 2013; http://finance.yahoo.com/news/wal-mart-cuts-profit-outlook-112129846.html.) Pundits have been expecting an increase in this key metric, so it’s a red flag. Of course, with Wal-Mart primarily catering to the lower income groups, the decline in sales indicate a tough time for consumers despite all of the riches made by the higher income earners in the stock market due to the Federal Reserve’s money printing strategy.
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