Wednesday, February 26, 2014

Unintended Consequences

(Cartoon by Lee Judge/Kansas City Star (2/25/14) and featured at McClatchy DC.  Click on image to enlarge.)

File this in the "Well, DUH!" box.

From the 2/21/14 New York Times:

Signaling how difficult the atmosphere for retailers remains across a wide range of customers, Walmart Stores and Nordstrom on Thursday both issued fairly weak forecasts for the coming year as they reported disappointing earnings for the fourth quarter.
Walmart cited international uncertainties like currency fluctuations and an economically struggling customer base at home as partial reasons for such sluggishness. ...

In a call with reporters, William S. Simon, the chief executive of Walmart U.S., said that cuts to the federal Supplemental Nutrition Assistance Program, or food stamps, crimped the company’s results. An exceptionally ferocious winter with multiple storms also cut into earnings, Mr. Simon said, detracting from a positive performance during the six-week holiday shopping period. He said the storms “aren’t an excuse, but merely an explanation.”
Ken Perkins, founder of Retail Metrics, said the company’s central problem was the plight of its core consumers, who are still struggling with stagnant wages and have been left out of areas of economic growth, like rising stocks and home values.  [Emphasis added]

It doesn't take an economics genius to explain the drop in earnings and the forecast for more of same, and I'm not talking about polar vortices, either.  When people don't have money to spend because they either aren't working or are making too little in wages, they can't spend. 

Maybe Walmart and Nordstrom could set an example and start paying decent salaries and provide such benefits as health insurance.  Or their lobbyists could start lobbying Congress to pass a reasonable minimum wage bill and an extension of unemployment.

In the meantime, I am just bitch enough to rather enjoy these corporations' fiscal discomfort.

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