As one of the few U.S. retailers still showing a healthy profit, Wal-Mart can tell us a little about the state of the economy. The sales report for July tells that the stimulus checks, paid by the Internal Revenue Service to taxpayers mostly in May and June, are gone now. More significantly, Wal-Mart is saying they are seeing a pronounced paycheck effect in many stores, as shoppers come in the day they receive their paychecks to buy essential supplies.
There are always significant numbers of consumers living paycheck to paycheck, but if there are so many that it shows up on Wal-Mart’s sales reports, it shows an economy that lacks resilience. People who are barely making ends meet don’t always have the flexibility to respond when economic conditions change, and that lack of flexibility, as it occurs across the economy, is what turns disruptions into recessions.
