Retailers reflect on current economic situation

Wal-Mart released their third quarter earnings report on Tuesday. Due to their size and the fact they sell such a wide range of consumer products to the low and middle classes of the economy, Wal-Mart’s performance is looked at as a sign of where the economy is. At first glance the numbers look good. Profit is up on the quarter which is always a good sign. However, if you dig a little deeper through those numbers you will see that the profit is mainly due to cost cutting and sales numbers from international markets.

The U.S. performance is still not good with low traffic and sales. This means that most people are still not able to spend like they used to. This is even despite increased effort by Wal-Mart to increase sales and traffic by offering more low prices than usual. They say that competition from dollar stores had an impact on their performance, which is even more telling about the economy in the U.S.

On the other side of the scale however, Saks Fifth Avenue, a high end American retailer, reported strong third quarter numbers. It suggests that the high income part of the economy is doing better and beginning to spend more once again. This shows that the discrepancy between the rich and poor seems to have widened in this recession, which is not a good thing. It also means that to some extent the rich are seeing an economy that is improving while the poor still seem to be looking at a recession in the U.S.

It is a tale of two economies based on income level and this means more needs to be done to improve the opportunities for the poor. Things like retraining programs, tax incentives for the lower income earners and employment help are necessary to shrink this growing gap. As the economy improves, hopefully all parts of the economy will begin to feel it so that it is not reserved for only the rich.