The two powerhouse retailers in the U.S. reported results this morning. No matter how you dice it, the results reflect a recessionary environment in the U.S. Wal-Mart’s U.S. comparable store sales went up 1.5%. You have to dig deep into their press release to find out that 1.4% of that increase is due to inflation. Their customer count went up by a whole 0.1% over last year. Does that sound like the results you would get during an improving economy?
Target is spinning their results as strong and the MSM will dutifully report it as so. Their comparable store sales rose by 2.9%. Sounds decent until your dig into the details and find that 2.4% of that increase is simply due to inflationary price increases. Their customer count was up a whopping 0.5% over last year. And that great increase in profits is a sham. They sold their credit card portfolio for a ONE-TIME accounting gain of $156 million. Retailers who are optimistic about the future always sell off their credit card receivables, right? If you back out that one time accounting gain, you see that their actual business saw profits PLUNGE by 14% over last year.
So the facts again prove that we are in a recession. I’m sure you’ll hear the same thing on CNBC today.