Job recovery not increasing consumer confidence, spending
BENTONVILLE, Arkansas (Reuters) — U.S. employers may be hiring again, but the job market recovery is not giving ordinary consumers enough confidence to increase their spending, a top Wal-Mart executive said on Monday.
In an interview with Reuters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said the improving employment picture had so far failed to raise cash register receipts at the retailer's U.S. stores.
"It's really hard to see in our business today that it's gotten any better," he said.
"We've reached a point where it's not getting any better but it's not getting any worse — at least for the middle (class) and down."
Last week, the U.S. Labour Department reported that U.S. employment growth jumped in June, and the jobless rate closed in on a six-year low.
The news, which was seen as proof the U.S. economy was finally growing briskly after years of a lackluster recovery, helped send the Dow Jones Industrial Average above 17,000 for the first time.
Simon said Wal-Mart's lower- and middle-income customers appeared to have made a number of changes to their shopping habits that were "not the best thing in the world for a retailer," splurging on events like back to school and holidays like the Fourth of July, but pulling back spending in between.
"They're adapting to what has been a difficult macroeconomic situation," he said.
In May, Wal-Mart Stores Inc said its profit fell nearly 5 per cent in the first quarter and forecast weaker-than-expected second-quarter earnings, citing among other things the continued financial struggles of its lower-income customers.
At least one in five of Wal-Mart's customers relies on federal government assistance to help buy groceries and other goods at the retailer's more than 4,000 U.S. stores.
Wal-Mart has also faced pressure from discount retailers such as Dollar General Corp, which have lured away financially struggling lower-income customers by slashing prices.
"People think we do better in a down economy," Simon said. "We don't. We do better when the GDP is growing, when the economy's good and we really need that in the long run for the business to improve."
