WalMart’s earnings call this morning confirms what I wrote yesterday, the US consumer is in full retreat.
The gas/tax return cash is going keeping a roof over their head and keeping the lights on. There is little more that the typical minimum-wage earner can do.
Wal-Mart CEO Doug McMillon blamed a decline in customers’ discretionary spending for the earnings miss. Discretionary spending for the newly employed ex-middle class family is nil.
When 89% of minimum-wage workers are over the age 20, with a majority having children, discretionary spending is splurging on a coffee cake for dessert.
These families are “shopping the rim,” which means milk, eggs, bread and perhaps chop meat. There’s no money to look down the aisles for expensive items, the sales items are on the aisle caps on the rim.
And McMillon all but confirmed it saying, “Based on recent surveys, we know that many of our US customers are using their tax refunds and the extra money from lower gas prices to pay down debt or put it into savings,” adding, “They’re also using these funds for everyday expenses like utilities and groceries.”