Some of the nation’s largest retailers are rolling back prices in response to low-income consumers hitting a proverbial brick wall. These consumers have maxed out credit card debt and drained personal savings to dangerously low levels in the era of failed Bidenomics. This also comes after an underwhelming April retail sales report and several notes from Goldman warning about faltering low-income consumers:
- The Largest US Trading Desk Is “Getting Bearish On The US Consumer”
- Goldman Warns Consumers Are Cracking As Stagflation Threats Emerge
- Goldman’s Commentary On Consumer Health Is An Ominous One
On Monday, Target announced, “It will lower everyday regular prices on approximately 5,000 frequently shopped items across its assortment. The retailer has just reduced prices on about 1,500 items, with thousands more price cuts planned to take effect over the course of the summer.”
“Consumers will enjoy savings on everyday items such as milk, meat, bread, soda, fresh fruit and vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels, pet food and more,” the retailer said.
One can’t help but ask what influence (if any) the Biden administration had in potentially pressuring Target to lower prices. Food inflation is crushing the working poor, as Democrats are begging the president to lower prices by executive fiat.
It wasn’t just Target rolling back prices. Walmart, America’s largest retailer, told analysts on an earnings call last week that it had begun reducing prices of grocery items.
John Furner, Walmart US’ chief executive, said stores have already issued 7,000 rollbacks. This move is intended to boost food sales in the second half of the year and prevent low-income consumers from trading down to Dollar Generals.
Walmart noted that high-income consumers were trading down to the retailer, which helped drive sales in its grocery business last quarter.
Walmart’s disclosure last week and Target’s announcement this week of price reductions on everyday items, with core cuts in food items, are direct responses to consumer fatigue after three years of high inflation.
A recent FT-Michigan Ross poll showed persistent inflation has soured the mood of 71% of those surveyed. And maybe if the Biden administration’s US Treasury, under Janet Yellen, wasn’t spending like it was in a depression, $1 trillion every 100 days, then perhaps inflation could come back down to Earth.
Joe Feldman, an analyst at Telsey Advisory Group, told the FT that Target unleashed price cuts on popular items to keep pace with Walmart.
Or, in our view, the administration likely nudged the retailers to drop prices or risk being attacked by ‘greedflation’ buzzwords by Biden’s social media team.
Feldman expects the price cuts by Walmart and Target will “likely expand to the rest of retail.”
Consumers are likely to vote with their empty wallets this election season. Research firm NIQ said the effects of inflation have led to consumers spending a third more on consumer packaged goods than they did in 2019.
“I don’t think we’re going to see much in the way of wholesale declines in prices,” Steve Zurek, vice president of pricing and promotion thought leadership at NIQ, said, adding that the outlook for prices was vastly different from two years ago: “It’s not going to be everything going up.”
Should consumers celebrate retailers lowering prices? Possibly, but don’t expect substantial relief anytime soon.
In addition to major retailers, McDonald’s recently considered returning $5 meal deals because low-income people are broke.
Great job, Bidenomics! The working poor has been crushed, set back a generation because of persistent inflation, produced by out-of-control spending by the federal government.
Goldman’s trading desk this morning noted, “The theme of challenging 1Q consumer results has continued.” This followed an underwhelming Target earnings report.
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