Wal-Mart Says That Consumers Aren't Buying

Wal-Mart made news yesterday when an internal e-mail from its head of finance and logistics surfaced nationally. He said that sales were a disaster in early February and this caused people to immediately question anew the strength of our economic recovery.

Since our economic recovery is only tenuous at best anyway, what's all the fuss about when Wal-Mart acknowledges such?

Meanwhile, politicians debate things that don't matter and try to claim credit from voters for working hard on their behalf, hoping against hope that somehow the economy will get better on its own. That said, even our feckless politicians must realize that they aren't doing much, if anything, to create consumer confidence and facilitate private sector investment by getting control of the government knows best gang and its out-of-control spending.

Wal-Mart Executives Sweat Slow February Start in E-Mails contains what the largest retailer in the world's head of finance and logistics has to say about sales:

"Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy . . . .

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales.“The worst start to a month I have seen in my ~7 years with the company.”

Wal-Mart and discounters such as Family Dollar Stores Inc. are bracing for a rise in the payroll tax to take a bigger bite from the paychecks of shoppers already dealing with elevated unemployment. The world’s largest retailer’s struggles come after executives expected a strong start to February because of the Super Bowl, milder weather and paycheck cycles, according to the minutes of a Feb. 1 officers meeting Bloomberg obtained.

Murray’s comments about February sales follow disappointing results from January, a month that Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, said he was relieved to see end, according to a separate internal e-mail obtained by Bloomberg News.

“Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do?” Geiger asked in a Feb. 1 e-mail to executives.“Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” . . .

When a payroll-tax break expired Dec. 31, Americans began paying 2 percentage points more in Social Security taxes on their first $113,700 in wages. For a person making $40,000 a year, that is about $15 a week.

The extra tax bite is about equal to a year of car insurance for a family making $30,000 or a basket of groceries per month for a family making $50,000, according to Wal-Mart’s analysis.

Other retailers who court low-income Americans also are bracing for the rising taxes. . . .

(Wal-Mart U.S. CEO Bill) Simon cited negative economic growth, declining consumer confidence and rising unemployment as challenges facing the company. The U.S. economy shrank at a 0.1 percent annual rate in the fourth quarter, and the unemployment rate rose 0.1 percentage point to 7.9 percent in January. The Conference Board’s measure of consumer confidence declined last month to the lowest since November 2011.

Even with a slow January, Wal-Mart is gaining market share steadily, Simon said.

“That points to our competitive landscape, which means everyone is suffering and probably worse than we are,” Simon said . . . .

Summing Up

We will avoid another recession this year. That's the good news.

2013 will be another very difficult year for jobs, consumer spending and unemployment. That's the bad news.

Our politicians will continue to avoid doing what's necessary to encourage the required private sector investment, including energy development, necessary to put our economy on a long term path to stability and growth. That's the worst news.

Self inflicted pain is always the worst.

Thanks. Bob.