TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Wal-Mart's glum forecast mirrors economy

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By The Associated Press
Friday, Feb. 22, 2013, 12:01 a.m.
 

NEW YORK — As the fortunes of many Americans go, so goes Wal-Mart, so goes the economy.

Even as the world's largest retailer on Thursday reported an 8.6 percent rise in fourth-quarter profit during the busy holiday shopping season, it offered a weaker forecast for the coming months. The problem? The poor and middle-class Americans who shop at Wal-Mart — and who are big drivers of spending in the United States — are struggling with rising gasoline prices, delayed income tax refunds and higher payroll taxes.

It's widely known that Americans in the lower income brackets continue to struggle, even as higher earners benefit from improved housing and stock markets, but Wal-Mart's results signal that matters may be getting worse for the nation's poor and middle class.

Wal-Mart is the latest in a string of big-name companies from Burger King to Zale to say those Americans are being squeezed by new challenges. Since Wal-Mart accounts for nearly 10 percent of nonautomotive retail spending, it is a bellwether for the economy.

“Wal-Mart moms are the barometer of the U.S. household,” said Brian Sozzi, chief equities analyst at NBG Productions who follows Wal-Mart. “Right now they're afraid of higher taxes and inflation.”

Indeed, while wealthier households have seen their stock portfolios grow, poor and middle-class Americans have struggled to regain their financial footing since the recession ended more than 3½ years ago.

Stocks have nearly doubled since June 2009. Dividends and capital gains from stocks, which disproportionately benefit higher-income Americans, are taxed at lower rates compared with ordinary income.

While incomes for most Americans have failed to keep pace with inflation since the recession, that's been particularly true for middle and lower-income earners.

Another hurdle for lower- and middle-income Americans has been the jump in gasoline prices since mid-January. The average price for a gallon of gas rose 47 cents in the past month to $3.78 on Thursday, according to AAA.

Tax changes also have hit the nation's lowest earners especially hard. On Jan. 1, Social Security payroll taxes rose 2 percentage points after a temporary reduction expired. That sliced about $1,000 from the take-home pay of a household earning $50,000.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Calgon Carbon poised for explosive growth
  2. CMU spinoff’s CEO gets council honors
  3. Market sell-off offers opening
  4. Natrona Bottling Co. keeps soda pop operation focused on craft, taste
  5. Chevron puts $20M into educating, training Appalachian workers
  6. Amid struggles, top fiscal executive to leave EDMC
  7. Stocks rally; S&P 500 has best day of 2014
  8. Allegheny Technologies reports $700,000 loss in 3Q
  9. High pollution levels found near Ohio gas wells
  10. Open enrollment puts varied impact of health care law back in focus
  11. PPG Industries to buy Westmoreland Supply paint store chain
Subscribe today! Click here for our subscription offers.