Eye on the Economy
Don’t be fooled by newspaper articles talking up positive effects from the current economic stimulus package. Yes, there are positive effects, but the reporting of these effects is often misleading. Here’s what I mean,
Last week I read an article online that specifically said the stimulus package was not working and our country was still in a recession. The very next day I read another article that said the stimulus package was indeed working and had increased spending. The example given for increased spending was Wal-Mart, who had increased sales by 1% that month. Hooray.
This is an oversimplification. Wal-Mart is poised to increase sales with or without the economic stimulus package because Wal-Mart is a discount store and, with prices rising as fast as they are and with it, people’s nerves, Wal-Mart will be gaining more and more business as consumers feel the pinch and switch to cheaper alternatives.
What the article neglects to mention was the other stores who aren’t as well positioned as Wal-Mart to profit and do well during economic downturns; businesses such as the Gap who experienced a sharp 14% drop in sales.
So if you ask me, yes, Wal-Mart will see increased sales, revenue, and business; but look to a decline in companies that do not readily provide basic needs and who aren’t basement bottom pricers. These are the companies who will be hurting for the months to come and who aren’t likely to benefit at all from any economic stimulus package.
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