Brad DeLong finds this strange


Wal-Mart is calling for cool sales in the quarter. People are spending on paydays mostly, and going for the cheapest things. Even the Labor Department was saying last weeks unemployment claims number was possibly a statistical abberation, and this weeks number was higher. Are we finally seeing the consumer spending recession that has been feared but so far unrealized?

Strange Third Quarter News From WalMart: Archive Entry From Brad DeLong's Webjournal: Strange Third Quarter News From WalMart

WalMart doesn't seem to have seen the same third-quarter spending boom that the NIPA estimates did, which is quite strange. Something seems to be wrong with our collective visualization of the Cosmic All:
Forbes.com: Wal-Mart dumps cold water on U.S. economic bulls: CHICAGO, Nov 13 (Reuters) - Economists and politicians giddy about prospects for U.S. economic growth got a dousing of cold water on Thursday from Wal-Mart Stores Inc.(nyse: WMT - news - people), the world's largest company. The retailer -- which taps directly into the psyche of the U.S. consumer -- gave a downbeat economic outlook that contrasted with reams of recent data, and bluntly suggested that many of its shoppers are barely making ends meet.

Customers continue to buy the cheapest items in any given category -- a sign that household budgets remain tight, Lee Scott, Wal-Mart chief executive officer, said on a recorded message. Buyers are "timing their expenditures around the receipt of their paychecks, indicating liquidity issues," Scott said. "I don't think consumer spending is slowing, but I also don't see the strength that many of you in the investment community appear to see," Scott said.

Wal-Mart's sober outlook came after the U.S. economy enjoyed its fastest gross domestic product growth in almost 20 years in the third quarter and is seeing job growth after a years-long slump. But retailing juggernaut Wal-Mart, based in Bentonville, Arkansas, is an economic indicator by itself. An estimated 100 million people shop at its U.S. stores every week. The company takes in 6 to 8 cents of every U.S. dollar spent on retailing, excluding autos. "The Wal-Mart numbers leave open the question 'is this just a breather in consumer spending or is it the start of the long-awaited consumer spending recession?'" said Cary Leahey, senior U.S. economist at Deutsche Bank Securities.

Wal-Mart's portrayal of financially strapped consumers highlighted worries about how spending would hold up once midyear federal tax stimulus -- chiefly, from child tax credits -- waned. Spending growth had been expected to slow after third-quarter growth of more than 6 percent, but by how much? Shoppers' caution will probably continue until there is further improvement in employment, Wal-Mart's Scott said...

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