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Wal-Mart slows, Europe is declining and America is flat

By , - Last modified: August 28, 2012 at 9:36 AM

Wal-Mart recently beat sales expectations, but full-year profit may miss analysts' expectations as growth slows in its international markets.

Wal-Mart's numbers are very important to the overall economy, because they are seen as a barometer of how average consumers in developed countries are faring today. Unfortunately, the outlook appears that there could be difficulties ahead.

The large retailer reported it was seeing a change in global consumers as they tighten their belts. Wal Mart noticed that its normal high beginning-of-the-month spending (when consumers get their paychecks) has been tailing off and is expected to continue to decline throughout the year. The retailer is planning on bringing back layaway this coming holiday season.

This may not be a good sign for the U.S. overall economy and seems to fit the narrative of the slowdown seen in China and Europe.

Speaking of Europe, it seems the Eurozone may be about to enter into a double-dip recession, posting a declining GDP of 0.2 percent for the quarter. This is not a surprise to many economists, as the Eurozone includes countries like Greece and Portugal.

Germany did post a modest 1 percent gain in GDP, but you have to wonder if that small of a gain is anything worth celebrating. It appears that Europe's choices are fading; it has low or no growth, rising debts and little reason to expect things to change any time soon.

Now for some good news. It appears that our inflation worries have been put on hold for a bit, as the U.S. CPI (Consumer Price Index) came in at 0.2 percent for the month and a rather low 1.4 percent over the previous July. (CPI is a measure of the average change in prices over time of the goods and services purchased by households).

While 0.2 percent should make us feel that our dollars are stretching further in the stores, right now it may not carry as much weight as it could, since the CPI doesn't factor two of the largest expenses of consumers: food and fuel.

I say, "Enjoy it while you can." Anyone who drives a car and buys food has started to see prices are steadily increasing, and while one of our worst droughts in recent history decimates our crops in the Midwest, we can likely expect higher food prices at home and abroad in the immediate future. The only question is how high?

Note: J.W. Cole Financial does not offer advice on individual securities; the information provided on Wal-Mart was provided as general economic information and should not be seen as an investment recommendation or solicitation for the purchase or sale of Wal-Mart.

Joe Wirbick is the president of the Lancaster financial planning company Sequinox. Joe specializes in retirement planning and distribution. This allows him to concentrate on developing strategies that help address the unique issues that confront retirees and those approaching retirement.

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