Friday, May 17, 2013

Turning that smile upside down

The latest economic outlook survey shows a dramatic increase in consumer confidence in the area of durable goods purchases. The number hasn't been this high since before the Bush Crash, and it parallels increased housing starts. What we're seeing is the belief among workers that they'll have a steady income long enough to pay for the new refrigerator that they've been putting off for years.

This doesn't mean that we don't have an ever increasing number of working poor who probably won't be buying anything new. This trend is starting to affect the bottom line of the country's largest private employer. That ubiquitous smiley face at Walmart has been flipped over at corporate headquarters and being used for a dart board. Sales are worse than flat for a company that has existed for growth the same way a cancer cell views its host, and as it turns out with similar results.  

It appears that the practice of Walmart laying waste to the economy of the surrounding communities may have not been a good business model after all. Not only do they pay below subsistence wages, but they relentlessly shut down all their small business competitors, and professionals that served them. Of course they've also been forcing out all the factories that used to make the stuff Walmart imports from China.

Throw in the austerity that Republicans backed by Walmart are imposing on local government and an ever larger slice of their market is simply disappearing. The Dollar stores are doing pretty well, so is the food pantry and the thrift store. The prison is doing pretty good, but it's been privatized and doesn't pay much better than Walmart anymore. Further depressing consumption is the declining birthrate and it would go to zero without the Earned Income Tax Credits that Republicans would love to end.

We need to keep in mind that this wasn't a blunder on their part, for the billionaires it isn't about making money. It's about capturing all of the real wealth, the Walton family alone has more wealth than the bottom 40% of Americans. This isn't anything new, this country was founded on need to get rid of British East India Company, which was truly the Walmart of its day. Until Americans become acquainted with history again there won't be any change. More accurately things will only continue to get worse despite any business cycle upturns like the one we've been seeing. The up's will be smaller, and the downs deeper until there simply is no middle class left.      Twitter @BruceEnberg  Sending me carrier pigeons is okay, but my cat eats the slow ones.


Anonymous said...

Remember the Reagan Administration created the earned income tax credit to relieve the free market from paying a living wage. With declining incomes the doubled the FICA Social Security tax and reduced benefits, I had to work until I was 65 years and 10 months to get full Railroad Retirement and Social Security. This extra money to the treasury has decreased the deficit for years. OH yes the higher income wage earners got a tax cut at that time.