[isellstuff]

"In case you haven't seen a sales report these days, February (month-to-date) sales are a total disaster," Jerry Murray, Wal-Mart's vice president of finance and logistics, said in an email to other executives that was obtained by Bloomberg News. "The worst start to a month I have seen in my (about) 7 years with the company."

Murray cited the payroll-tax increase that kicked in at the beginning of the year as the culprit of weak consumer spending.

Leaked Wal-Mart Email Drags Down Retail Stocks

I'm seeing a pretty big slowdown for February as well.

[Chuck Hamrick]

And the Sequester is going to increase this worse. Here I thought we were heading for an upswing. Better tighten your belts again.

[isellstuff]

Originally Posted by Chuck Hamrick

And the Sequester is going to increase this worse. Here I thought we were heading for an upswing. Better tighten your belts again.

Agreed. The sequester will cause even more severe issues. The only bright side that I see is that gas prices may come down as fracking increases our oil supply.

[Convergence]

Been saying this would happen since the election...

"We'll have to see what Wal-Mart has to say next Thursday and we don't know the exact context of this email, but you could extrapolate that low-end consumers are certainly being adversely affected by the payroll-tax increase and higher gasoline prices," said Art Hogan, managing director at Lazard Capital Markets.

..and it isn't JUST "low-end" consumers.

Quite a few folks went out and bought cars at the end of the year. Add that $500/month car payment to $200 month decrease in take-home pay, add those on top of gas prices and here we are...

[Chuck Hamrick]

I can't remember the particulars but it seemed that companies were paying high dividends at the end of the year in anticipation of tax laws changing.

[Convergence]

Originally Posted by Chuck Hamrick

I can't remember the particulars but it seemed that companies were paying high dividends at the end of the year in anticipation of tax laws changing.

Sure the average American didn't see those...

[AffiliateHound]

US oil production is at its highest level in 10 years, and there are 6 times as many active oil rings operating in the US than in early 2009. Oil production is UNRELATED to the cost of gasoline, which is driven not by typical economic factors such as supply and demand, by rather by the actions of international oil speculators. In fact, the more drilling, the higher the cost as the chart shown here demonstrates. Our increased oil production should reduce dependence on foreign oil, but lowering the price is a different story.

It Congress allows the sequester to go into effect, we all will suffer the extreme consequences for years to come. Not only will consumer spending be drastically reduced, but unemployment will rise, and a new recession will be likely.

[Tburke3830]

I guess Walmart sales could forecast economic outlook but the upper class and even a portion of the middle class which are the ones that generate all the tax revenue, are not shopping at Walmart.

[JCrooks - AffiliateWindow]

Originally Posted by Tburke3830

I guess Walmart sales could forecast economic outlook but the upper class and even a portion of the middle class which are the ones that generate all the tax revenue, are not shopping at Walmart.

Sorry, but I must disagree. I am middle-class, trying to stay that way, and I'm at Wal-mart all the time. So are my friends and neighbors.

[Convergence]

The same shoppers who go to Walmart also go to other stores in our community, including fast food restaurants, etc. If they are not spending money at these locations then the entire community suffers.

Originally Posted by Tburke3830

I guess Walmart sales could forecast economic outlook but the upper class and even a portion of the middle class which are the ones that generate all the tax revenue, are not shopping at Walmart.

There are far more shoppers of Walmart than there are not. The upper middle-class and upper class spenders make up far less of a percentage. The "top 2%" can not be taxed enough, can not spend enough, to save any budget crisis. If the remaining 98% are not earning, then they are not spending...

[jeanverti]

That sounds more like a political scare tactics to me...

[Convergence]

Originally Posted by jeanverti

That sounds more like a political scare tactics to me...

Whatever it sounds like - it is what it is...

[isellstuff]

Originally Posted by jeanverti

That sounds more like a political scare tactics to me...

US consumers got a 2% increase in taxes starting in January. The full extent of the increase wasn't realized until the end of January/Beginning of February when consumers said, oh, wait a minute, my budget isn't quite going as far. At the same time, gasoline prices increased 12%.

Most US consumers live paycheck to paycheck, so they have had a bit of a rude shock which has cut back on discretionary spending.

On March 1st, we may have massive government spending cuts. They will yank out 85 billion dollars from the economy between March 1st and the end of September. This will happen because our divided congress can't agree on ANYTHING.

I mean, it is a scary situation, but like convergence said, it is what it is. With 16 trillion dollars in debt, the US government has to do something because the debt is only going to get bigger as more and more baby boomers retire.

I think everyone's question is, "how bad will this hurt and how long will it last?"

[scottfanello]

I think this thread is ahead of the game. This is a leaked email and should be taken with a grain of salt. I used to be a big peak oil advocate until I couldn't handle the negativity anymore. When you're in one of those ruts you're always on the lookout for negative news. Let's see what the real 1st quarter reports are for Walmart when they come out in April. Until then, I say we press on with good expectations.

Amazon on Tuesday reported its earnings for the fourth quarter [2012], during which it took in $17.4 billion in revenue. While its net sales were up 35% from the $12.95 billion reported during the fourth quarter last year, the company missed analyst estimates of $18.26 billion in revenue for the quarter...Net sales for the year jumped 41% to $48.08 billion, up from the $34.20 billion the company reported in 2010.

I added this quote from an Amazon report that came out last month since I think Amazon's sales are a better representative of the affiliate industry.

[isellstuff]

Originally Posted by scottfanello

Until then, I say we press on with good expectations.

I actually use news like this, and my YOY results as a motivator. If I see my numbers are falling, then I work that much harder to get them back up to previous levels. I end up winning no matter the outcome.

Curious if there are AM's out there with big, steady traffic that haven't seen a YOY drop for February?

[Convergence]

You missed something important about Amazon...

Net income fell to $177 million from $416 million a year earlier.

[isellstuff]

Wal-Mart has issued an official warning:
Wal-Mart warns of soft start to the year - Feb. 21, 2013

An article about how this will affect Wal-Mart's suppliers:
Wal-Mart's suppliers could be hit by payroll tax and gas prices - Feb. 20, 2013

National Retail Federation Consumer Poll to see how consumers are feeling (58% have stated they had to change their spending to adjust for budget shortfalls):
National Retail Federation - 2013 Tax Returns

[isellstuff]

Darden Warns (red lobster, olive garden)

CNNMoney - Business, financial and personal finance news

[scottfanello]

Originally Posted by isellstuff

I actually use news like this, and my YOY results as a motivator. If I see my numbers are falling, then I work that much harder to get them back up to previous levels. I end up winning no matter the outcome.

Winning no matter the outcome sounds good to me! Isellstuff, did you ever change niches in the past during economic downturns? I know when this last recession started Spam production, yes the actual meat product (), shot through the roof. I doubt there's an affiliate program for Spam but I'm sure there are other niches out there (like prepping) that do well when times turn tough.

[Chuck Hamrick]

I doubt there's an affiliate program for Spam but I'm sure there are other niches out there (like prepping) that do well when times turn tough.

Yes, when bad economic news comes out sales for emergency foods shoot up. When the tsunami in Japan hit it went through the roof. Was surprised that Sandy didn't drive more sales but it caught many that didn't consider it by surprise.

[isellstuff]

Here is an interesting one:

Why Consumers May Be On Crash Course

Synopsis:
Coupon.com CEO says consumers are clipping coupons at a rate not seen since before the 2007 recession. Evidently they maintain an "Internet Coupon Index" and the pattern they are seeing is almost identical to the own before the last recession. The higher their index range, the more consumers are under economic pressure.

[bblythe]

@isellstuff,

Great find! I dig the article. But it sounds like the Steve is saying conflicting things "when people feel threatened they try to save money with comfort foods" "When people feel threatened they spend money on luxury beauty supplies". That doesn't seem to line up.

Also the graph doesn't show any discernible pattern leading up to the recession, just the behavior afterwards. A similar spike can been seen around the same time each year, sure that spike is far less pronounced, but it's there. How much of the increase in coupon use and redemption could be attributed to an educated consumer?

Steve also indicates that the coupon index means we don't have to wait months for consumer data to come out, but only provides data to two months ago -- then extends the last month's pattern through January.

More and more here at PSW, we have been talking about how we wind up training our customers to use coupons, and that it's a bad thing. I postulate that the index score will continue to go up, rain or shine, as customer's learn how to use Google. TM+ keywords are valuable for couponers for a reason.

Agree or disagree, great article. I am really interested in the democratization of economic indicators, and I can see how the index can be perceived as such in a vacuum where consumers don't learn anything.