It is another day that ends in “y,” so it is not surprising that President Joe Biden and his administration have been proven incorrect once again. Over the last year, the White House has pulled a Hillary Clinton by blaming everyone and everything for today’s cost-of-living crisis. From former Press Secretary Jen Psaki to Sen. Elizabeth Warren (D-MA), the leftist regime has pointed to Corporate America’s greed for the consumer price index (CPI) soaring above 8% and the producer price index (PPI) hitting double digits. According to these Democrats, it is not the immense pandemic-era fiscal and monetary expansion at fault but rather retailers taking advantage of consumers by artificially raising the price of food, beverages, and apparel. This intellectual pollution has ventured to the airwaves and white space in newspapers, but the latest numbers have eradicated the false notion that companies are randomly jacking up the cost of goods and services.
Are the Bears Coming for Big Retail?
Target shares collapsed more than 25% during the May 18 trading session after it reported abysmal quarterly earnings that fell short of market forecasts. The earnings per share (EPS) were $2.19, below analysts’ expectations of $3.07. Revenues, sales, and store and web traffic also rose. The problem? CEO Brian Cornell says the retail giant missed its target, and the gains were “accompanied by unusually high costs.” Target forecasts were not as ebullient as they were a year ago when consumers were flush with stimulus checks and optimism about COVID vaccines.
Walmart stock plummeted 17% over two sessions, falling to a 52-week low of around $122. Like Target, the nation’s largest retail outlets posted missed earnings expectations for the January-to-March period and lowered its profit projections. In addition, the multi-national corporation confirmed that it is facing pressure on higher inventory levels, surging fuel costs, and even labor issues.
Lowe’s Companies fell nearly 6% midweek, despite a solid earnings report. While EPS topped market estimates, revenues fell short of what the market had penciled in, and the full-year outlook was revised downward. Demand eased as net sales missed analysts’ expectations.
Meanwhile, recent industry data show that restaurants are raising prices, and consumers are noticing that they are both higher and too much. Earlier this year, Starbucks and Tim Hortons announced they were increasing menu prices in response to skyrocketing inflation. Other chains, such as Domino’s, Subway Restaurants, and Burger King, are engaging in shrinkflation – smaller sizes for the same price.
What is worse is that most American CEOs now anticipate that a recession is coming as the nation grapples with inflation. The Conference Board Measure of CEO Confidence tumbled to 42 in the second quarter, down from 57 in the first quarter. Although they are confident that a series of interest rate hikes will cool inflation, the Federal Reserve’s tightening crusade will lead to a recession.
Joe Biden (Photo by Chip Somodevilla/Getty Images)
How much longer will consumers endure this abnormal economy and continue to raid their checking and savings accounts? A recent Bankrate report found that 40% of US adults say that money is having a serious impact on their mental health. Perhaps for the sake of their wellbeing, they may need to sit on the sofa and stare at the ceiling to save some cash.
Won’t Get Fooled Again
Once again, the data disprove the administration’s assertion that corporations are manufacturing inflation because they want to fleece consumers and add to their bottom lines. Companies are responding to market conditions, from increasing freight costs to supply chain disruptions to the creation of new units of currency entering the global marketplace. Indeed, politicians either cannot grasp or choose not to understand how economics works. The American people are ignoring one of the chief tenets of the state: “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.” Common sense supersedes the logic from the so-called smartest men and women in the Swamp.
