The End of the Retail Recession Is Good — or Maybe Bad
It might be a sign there will be no broader economic slowdown, but it might also signal faster inflation ahead.
Walmart has had to clear out a lot of excess stuff.
Photographer: Brandon Bell/Getty ImagesIt’s been a messy year for macroeconomic analysis. Wild swings in inflation, energy prices, the stock market and consumer behavior have led to mistakes by companies and investors alike. Retailers have gotten caught in these shifts, as evidenced by the way both Walmart and Target misjudged changes in consumer behavior that began in March. The stores ended up with too many goods that consumers didn’t buy as they shifted their spending to travel and leisure, or got squeezed by inflation.
Fixing these mistakes has led to pain for retailers. But this week both Walmart and Target said on earnings calls that they’re almost back to where they want to be. That’s significant because it means retail can shift from being a drag on the economy to being a driver of growth again. And it calls into question whether economic weakness will continue much longer.