Wal-Mart’s Worst Stock Crash In 27 Years Is Another Sign That The Economy Is Rapidly Falling Apart

TEC ^ | 10/18/2015 | Michael Snyder

[SeekAndFind]

Now that a major global recession has begun, you would expect major retailers like Wal-Mart to run into trouble as consumer spending dries up, and that is precisely what is happening. On Wednesday, shares of Wal-Mart experienced their largest single day decline in 27 years after an extremely disappointing earnings projection was released. The stock was down about 10 percent, which represented the biggest plunge since January 1988. Over 21 billion dollars in shareholder wealth was wiped out on Wednesday, and this was just the continuation of a very bad year for Wal-Mart stockholders. Overall, shares had already declined by 22 percent so far in 2015 before we even got to Wednesday. Here is more on this stunning turn of events from Bloomberg…

See link for Bloomberg text.

If it was just Wal-Mart that was having trouble, that would be bad enough. But the truth is that signs that the U.S. economy has entered another major downturn are popping up all around us. Just consider the following list of economic indicators that Graham Summers recently put out…

The Fed has now kept interest rates at zero for 81 months.

This is the longest period in the history of the Fed’s existence, lasting longer than even the 1938-1942 period of ZIRP.

And the US economy is moving back into recession. Consider that…

1) Industrial production fell five months straight in the first half of 2015. This has never happened outside of a recession.

2) Merchant Wholesalers’ Sales are in recession territory.

3) The Empire Manufacturing Survey is in recession territory.

4) All four of the Fed’s September Purchasing Manager Index (PMI) readings (Philadelphia, New York, Richmond, and Kansas City) came in at readings of sub-zero. This usually happens when you are already 4-5 months into a recession. (H/T Bill Hester)

Another huge red flag is the fact that month after month fewer products are being shipped around the country compared to last year.

If less stuff is being shipped around by truck, rail and air, is it a sign that the economy is getting better or is it a sign that the economy is getting worse?

The answer, of course, is self-evident. With that in mind, please read the following excerpt which comes from a recent article by Wolf Richter…

It has been crummy all year: With the exception of January and February, the shipping volume has been lower year-over-year every month!

The index is broad. It tracks data from shippers, no matter what carrier they choose, whether truck, rail, or air, and includes carriers like FedEx and UPS.

Evidence keeps piling up in the most unpleasant manner that something isn’t quite right in the real economy. The world is now in an inexplicable slowdown – “inexplicable” for central bankers who’ve cut interest rates to zero or below zero years ago, and who’re still dousing some economies with QE even as governments are running up big deficits. And yet, despite seven years of this huge monetary and fiscal stimulus, the global economy is deteriorating.

Okay, so is there anyone out there that still believes that the U.S. economy is in good shape?

The Obama administration will probably not admit it for a very long time, but the truth is that the numbers very clearly tell us that we are in a recession.

Anybody out there, whether an “expert” or just someone you happen to know, that tells you that everything is just fine is either completely ignorant or they are purposely lying to you.

And just like in 2008, state and local governments are starting to get into tremendous financial trouble as the real economy sputters. For example, the governor of Illinois has told reporters that “we are out of money now” and that pension fund payments will be delayed as a result…

See link for Bloomberg text.

When these sorts of things started happening in 2008, Fed Chairman Ben Bernanke and the Bush administration went into full-blown denial mode. They kept telling all of us not to worry and that everything would be okay, and that just made things worse in the end.

The same thing is happening now. The Obama administration and the mainstream media keep talking about an “economic recovery” even in the face of numbers such as I have discussed in this article.

Perhaps things are going well for you personally at the moment, and that is great. But now is not the time to buy lots of new toys. Nor is it the time to accumulate more debt.

Instead, now is a time to position yourself for a period of difficulty that could stretch on for years.

The next recession is here, and it is going to grow progressively worse.

The wise will take heed and make preparations, but the foolish will just keep on doing what they have been doing until it is far too late.

[packrat35]

You wrote it more elegantly than I did, but I agree that many of US companies are going through this. Wal-Mart has been doing this for years and even my wife, who used to go there every week (usually more than once a week), now goes there less and less.

I may stop in Wal-Mart 3 times a year. Saving one dollar is not worth 30 or more minutes of my time. They CAN and COULD have afford to pay for the extra help and probably would have made more money, but they willingly choose a different path. Their cheapness is now starting to cost them and it will be much more expensive for them to reverse the trend now that the damage is done.

McDonalds is another example of crating their standards to make a buck. Almost any other chain with their troubles would have gone bankrupt by now. They are coasting downward of the past reputation.

McDonalds needs to do three things to reverse the trend.
1. Eatable food - Sad that they can’t figure this one out.
2. Service - It sucks and gets worse every year
3. Kill off hald the bloated menu and go back to selling what you are. You are a burger joint-not a health food store.

[Rockingham]

There is a 24 hour Wal-Mart within a half mile of me, but about three years ago, it began rearranging its shelves and dropping old product lines, some of which had drawn me on a regular basis. The Wall Street Journal described this streamlining as a cost-cutting move but it left me alienated and sometimes at a loss to find what I wanted.

Now I make a local shopping circuit about once a week, with Wal-Mart often not included. When I do go, I notice that the local Wal-Mart is looking a little like it used to, with some of the old products and brands back on the shelves. The arc of ill-considered changes that do poorly and are then reversed in large part seems like a theme of the Obama era.

You are all too correct about McDonalds. As US companies get large, regular earnings growth seems to become ever more important and to come at the expense of reliable quality product and service, long-term growth, and sound corporate strategy. I can easily see MacDonalds going belly up if they do not get their product and service equation right.

[GailA]

Don’t forget that communications will be among the first to go down. Ham Operators will be in high demand. Hubby is one of the older Hams who learned Morse code as part of his training. I don’t even know if it is taught any more.

People can learn to weave if need be, or dry skins for clothing or shoe usage. Hunting skills will be necessary too. So many things we modern people take for granted.

Both hubby and his youngest daughter are IT professionals. And he is a car junkie.

[familyop]

Freepmail sent your way. Have fun. Become the neighborhood fashion mogul. Keep people warm after the end of the world as we know it. :-)

[familyop]

Ham radio is fascinating. Been studying with several others for the tests (”tests” plural, because we’re far from repeaters here). We’ll also have fun with kits (also electronics nerds here).

[familyop]

"Hunting skills will be necessary too."

If you don't already have a rural lot, try to get at least a cheap, vacant one away from town. With enough time and patience, it's doable. Hunting is good, but I lived in the Ozarks for a few years long ago. The old timers told me that wild game became pretty rare during the Depression.

Probably speaking to someone who is already experienced and knowledgeable, and please excuse me if so, but... Even on a tiny lot, chickens are relatively easy. In your part of the country, gardening is also easy. Canning is also easy and safe enough, if instructions in a good canning book are followed perfectly.

greeneyes here at FR posts a weekly gardening thread on Fridays.

[familyop]

"The 'problem' is... well, judge for yourself:"

Yeah, for sure! Might be better looking choices from China or south of the border.

[Crispy]

Fred Meyer and other Kroger owned stores us a technology called QueVision. Basically it records people coming in and out of the store and estimates when they will hit the checkstand. The managers use this information to send more people to the checkouts when they expect a surge.

They also have technology that auto scans your items using lasers as it goes down the belt. I demoed it in one of the Kroger stores near the Cincinnati airport (which is in Kentucky). It is not quite ready for prime time. Works fine for most food products. Not so much for things like clothing.

[Yaelle]

With clothing, you get what you pay for up to a certain level. Ridiculous $10,000 shirts are ridiculous. But I did a fun experiment with my son’s school red cotton polo shirts. I bought one of the uniform kind, the cheap ones you get at cheap department stores made to be low cost for people buying uniforms. I bought a few Lands End shirts. And a few from Ralph Lauren. With the pony.

He wore the heck out of these shirts from September to June. Well, most of them, anyway. By February, the cheap uniform shirt was light pink with fraying hem, and it had shrunk to where he could no longer wear it. Trash. In June, the Lands End shirts were light red, a nice even fade, and they had shrunk a bit and lost some of their shape. But they did serviceably well all year and they weren’t costly. No frays or rips. I was not surprised that the Ralph Lauren polos made it, but the bright red color had not even faded a little. They had their shape and had not noticeably shrunk at all! I honestly thought I was “paying for the pony” logo but it turns out they truly were better made and used better dyes and better cotton. They lasted the next year as well until he outgrew them.

It is better to buy used from quality yard and estate sales or ebay, from good companies, and save money that way than to buy the cheap clothing from big box stores.

[GailA]

Oh, we live rural, this year the cicadas destroyed nearly every thing planted. The only thing that survived was the blackberries. Moles got what the cicadas didn’t. 200 strawberry plants. Hubby went to mow yesterday and found a half dozen new mole runs in the front yard. Neighbors on both sides of us had the same issue, and across the street. Appeared out of no where. Weather pattern was also abnormal for us. To cool, not enough rain, since we live in West TN that is not normal, high humidity, little rain and high temps are the norm.

We have 2 small dogs so poison is out of the question.

[GailA]

Salvation Army has great deals on used clothing. It is about the only place seniors can find clothing that does not look like a Street Walker was wearing it.

[Tammy8]

Thank you for that link, it does look like a great way to shop.

[daniel1212]

Some are not longer available, or prices went up. But thank God for what competition enables. Now about ISP’s...

[mad_as_he$$]

My local one was out of ammo for about a year - shelves bare. Now they have plenty of anything but 22.