So, WalMart Lowers Projections, Huh?

[ProfessorGAC]

Things that make you go "Hmmmmmm".

Just yesterday, there was a thread here based on a Yahoo story about economists predicting a roaring rest of the year. As usual, i argued otherwise. (Many of you already have figured out that i'm one of the anti-conventionalists in the economics community, so no surprises there.)

In that thread, i covered my reasons, and some of the figures as to why this was unlikely to be accurate. (With minimal math, so readers' eyes wouldn't glaze over.)

Anyway, now WalMart is lowering expectations for both revenue and profit. (Another thread here in GD today.) So, if the world's largest retailer is lowering their expectations, and the economy is nearly 70% consumer spending, and the lowering of those expectations is based upon the first two quarters' performance, i have one question to those prostitute economists:

Who's laughing now?
The Professor

[Philostopher]

1. Yeah, and I suspect you're right, but ...

could this possibly be spun as 'everything's so rosy, people are no longer forced to shop at WalMart and are opting to pay more for retail product at upmarket reatailers?' Just wondering.

[ProfessorGAC]

2. That's Pretty Good Spinning!

I wouldn't buy it for a microsecond, but it is a good spin.

Walmart became the biggest retailer in the world for reasons that go far beyond people HAVING to buy their goods there. For instance, you can still buy a large HDTV at WalMart. That's upscale, no matter which store you buy it at, right? A $4k TV is pretty darned upscale.

Someone could try to spin it the way you suggest, but that would be an awfully desperate measure. The reality is, that the vast middle sections of the income strata are just not shopping enough to keep the analysts at Walmart happy. There is only one logical explanation for that.
The Professor

[Philostopher]

3. I wouldn't buy it either.

And I think you're right about it, don't get me wrong. My suspicion is that one of the primary reasons why WalMart is 'suffering' is that the bulk of their regular customers are maxed out on their credit cards and have reached the cul-de-sac in their personal finances. They simply can't afford to keep buying discretionary items.

I'm no economist, I don't even play one on TV, but just from observations I think credit and mortgage refis are what's kept the 'bubble' going, and that if the housing market and automotive markets tank, we're going to be in a world of hurt. Too many people speculate on real estate, these days, rather than buying to live in it; too many are cycling credit between cards and using their homes to leverage additional credit. Too many are buying houses and cars they can barely afford, instead of buying only what they need and can comfortably afford.

I have high hopes for the Kerry campaign, especially now that Edwards is on the ticket, but I'm not sure they won't be taking on a serious economic quagmire if they do take the White House. I'm to the point of thinking, 'well, at least they won't use it as an excuse to screw everybody like Bush* would.' But somebody's going to have to get screwed, if people who think the way you do are right.

[NewYorkerfromMass]

5. well they are getting competition in the electronics market....

but I suspect you're right.

[RichardRay]

4. Help finding your previous post?

The scroll rate on this site is pretty quick! I couldn't find your previous post and I'd like to read it. Can you give me a link or message me with the text?

Richard Ray - Jackson Hole, WY

[ProfessorGAC]

7. I'm Too Lazy!

You should be able to find it pretty quickly. Use the search function. You have a star, so you should be able to search.

Just search my screenname and just select the Latest Breaking News forum. It was just yesterday, so it should come up pretty quick.
The Professor

[Turanga Leela]

6. Is it possible the slow drip of negative opinion becoming a stream?

I can only speak for myself, but 18 months ago, when I was not as aware as I am now about Wally World's abhorrent practices, i was in there 3 times a week. Now, I actively LOOK for alternatives to shopping there. Sometimes I still have to go (GAG), but not more than once or twice a month. Also, I've been talking to anyone who will listen about how much WW sucks and why.

I know I'm only one insignificant person, but just a few less visits a month multipied across the country...that has to add up and make some kind of negtive impact, even if it is infinitesimal.

[ProfessorGAC]

8. That's Certainly Possible, However. . .

Remember that a half of the country that knows about these practices, couldn't care less, and the other half of the country doesn't know about these practices.

So, this effect would seem to be hardly the reason for their internal analysts to lower profit projections. Remember, the more recent american corporate cultures have been leaning more toward cheating, lying, and misrepresentation, not admitting to losing market share because they angered some segment of the consumer base.

What you're saying is possible, but i have a hard time seeing how it would have this high an impact.
The Professor