Posted on 10/18/2015 6:56:45 PM PDT by SeekAndFind
Edited on 10/18/2015 8:36:26 PM PDT by Admin Moderator. [history]
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.
The needle approaches the bubble...
Thank God they raised their minimum wage. That’s the important thing.
If people cannot afford to shop at WalMart, this is really, really bad.
They just need to prop this thing up for another 12-14 months. But — you know — if a Republican were to get in the White House, I bet the booming economy would suddenly turn into a house of cards. Darn those Republicans!
Walmart’s online shopping is rather inferior to Amazon, both in variety and presentation. Last month I contended with a vendor of theirs who was charging 38.32 (”Was: $52.18”) for a 1.88’’ x 35yd roll of Gorilla tape, which i had bought previously for about 8.58, the normal price (like at Amazon). And they still have not fixed it: http://www.walmart.com/ip/Gorilla-Tape-6035120-1.88in-X-35yards/15160329
What would you think about Walmart building a super store today, just across the street from an existing Walmart (kind of medium size)?
I have my opinion, just checking it.
“If people cannot afford to shop at WalMart, this is really, really bad.”
You can add McDonald’s to that list.
Not a peep from the MSM - oh, I forgot, a Republican isn’t President.
This statement may be true, but it is also misleading. U.S. companies have been dealing with unusually high inventory levels for most of the year, due to overstocking of merchandise as a defensive measure during the West Coast port strike that ran from last fall through the early spring.
Truck transportation rates are higher in 2015 than they were at any time in the last few years, despite a sharp drop in fuel prices. If freight volumes were really down, then I would expect these rates to be dropping through the floor.
May its all scare. We are seeing recovery. New construction, defaulted developments selling lots again. Maybe there is enough recovery that some people no longer need to shop there. It is not a pleasant shopping experience, thats for sure.
Come out of a walmart and wonder just what has happened to America-—humanity.
Maybe Dollar General (ugh) is better? Can run in a and run out
and not have to hike a 20 acre floorspace and 40 acre parking lot? All the super walmarts are WAY out on the outskirts of town.
Everything in walmart is china-made..same for dollar general.
So why would economy shoppers bother with wally? There a DG on every rural intersection.
Costplus World Market store near me is putting out Christmas stuff already and discounting Halloween stuff.
“Wal-Mart’s Worst Stock Crash In 27 Years Is Another Sign That The Economy Is Rapidly Falling Apart”
Nope. Just a sign Walmart is rapidly falling apart. Fool bean counters are now running Walmart, and they can’t figure out that people quit shopping there because they refuse to keep the shelves stocked and open enough checkout lanes.
It’s why I quit shopping there for groceries for those reasons. Mondays are the worst as they refuse to run trucks on Sunday, so the shelves are stripped bare on Monday. Even normally, they refuse to fully stock the shelves, and yeah, open checkout lanes too.
The local grocery stores here long ago learned to compete with Walmart by lowering their prices and increasing their service; at least the Kroger-owned store chains here have figured that out. They’re packed to the rafters all the time now around here and have all their checkout lanes going full blast, while over at the Walmarts it’s basically SleepyTown.
Walmart said the decrease in earnings forecasts were the result of their wage increases and they have always been pretty blunt about economic trends based on their own internal measurements (a sizable amount of data).
This may be a perfect example of how deceptive media can be. This piece and another both saying different things.
Here is the thread from yesterday linking an Investor’s Business Daily Report using this stock price drop to show how the democrats minimum wage agenda will negatively impact businesses.
http://freerepublic.com/focus/f-news/3349923/posts
This article says the stock price drop is proof of how bad the recession is.
Goes to show - use discernment when reading “news”. I suspect the truth is somewhere in the middle - part labor costs and part sputtering economy.
In one Walmart, there’s steady customer traffic in groceries and drugs, but not much in the other departments. Many people tend to be more frugal with age, and there aren’t many jobs for younger folks.
I’m sure that the media will turn around soon enough and blame the new recession on Republicans in Congress who have obstructed Obama’s brilliant plans.
I live near a Dollar General, and shopping there is horrible. It seems they’ll leave one register open until there are fifteen people lined up, then another of the cashier/stockboy/janitors comes over and opens another. They run on a skeleton crew, and the prices don’t seem better than a regular supermarket - lower prices just buy smaller packages of goods.
Very bodega-like, IMHO - and geared towards the same clientele. The pictures online of Wal-Mart shoppers could just as easily have been taken at the nearby DG.
No, we are not headed for another recession, short of a political crisis.
Walmart’s business model has some flaws. They can’t/won’t stock shelves consistently. The customer demographic is often disgusting. The shopping effort to reward ratio is increasing.
Who cares? There’s Costco, Trader Joes and Amazon.
As for recession, we had relentless oil price hikes in 2008 which caused everyone to step back, hunker down and see their finances when the dust settles.
We have nothing like that today.
Wal-Mart has also had to bear the expenses of upward wage pressures and of developing their Neighborhood Wal-Mart line of stores, which tend to have higher marginal operating costs. With this accumulation of ills and overseas growth tapped out, Wal-Mart can no longer command superior stock market performance.
Travelling the interstate highways from coast to coast I don’t see how there could possibly be room enough for any more 18 wheelers than what I am seeing.
I do know that my business is off (mainly due to the downturn in the oil patch) but there are a LOT of goods being moved around and that, to me, translates to a good business climate.
It may be that companies are not meeting projections or achieving goals but “stuff” is being shipped all over the country.
Take it for what you will ...
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