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The paradox of the Walmart economy

Walmart’s business has been on an upswing. But is it true that as goes the nation’s biggest retailer, so goes the nation’s economy?

Correction: The original version of this story incorrectly stated the day on which Walmart would report its quarterly earnings. The company reported earnings Thursday, August 16, 2012. The text has been corrected.

Jeremy Hobson: Walmart reports its quarterly earnings Thursday morning. The world's largest retailer has seen its stock rise sharply over the last three months.

Good news for Walmart, sure -- but not necessarily great news for the economy, as our senior business correspondent Bob Moon reports.


Bob Moon: Analysts were downright giddy ahead of Thursday's earnings report. One even declared that Walmart seems to be "in a better place than it's been in over five years." So it might be easy to jump to the conclusion that, as the country's biggest retailer goes, so goes the recovery.

But economist Joel Naroff points out the chain could just be benefiting at the expense of its rivals.

Joel Naroff: The increase in the Walmart sales may be simply coming out of other sales of mid-level retailers, and that would not be a sign that the economy is getting better.

Economist Ken Mayland agrees. He says Walmart has been on an upward trend, while overall retail sales just notched their first gain in four months.

Ken Mayland: Consumer spending has definitely been on the light side, and consumers have had to dip into their savings to sustain spending.

Which might actually bode well for Walmart. Again, economist Joel Naroff.

Naroff: This may be a signal that households have become more cautious and they're going back to discounters, and they're making sure they get everything they can for the pennies that they spend.

Naroff says he'd like to see sustained sales growth across the retail sector.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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