Despite the media hype and bizarre headlines generated by the just completed Black Friday retail event, the annual day-after-Thanksgiving shopping holiday has come and gone with little economic impact in the US. In fact, a leading survey of economists forecasts US growth will be a modest 2.5% in the final three months of 2011.
Just as a famous Wendy’s ad campaign once posed the question, Where’s the Beef?, US-based retailers may wake up Monday morning asking Where’s the Growth?
Well, if you are the world’s largest retailer, the answer appears to be Argentina, China and Mexico. In its most recent earnings release, Walmart International reported a 20.3% increase in sales compared to a 2.7% increase for Walmart US stores. According to the report, “All markets had constant currency sales growth, with Argentina, China and Mexico providing the strongest growth in the third quarter.” An additional US$2 billion of international acquisitions also boosted Walmart International’s quarterly sales figure to US$32.4 billion.
While Walmart acknowledges “the economy continues to weigh on U.S. customers,” Latin American markets, consumer confidence and purchasing power are surging, trends well documented in a recent Wall Street Journal article, A-Rags-to-Riches Career Highlights Latin Resurgence. In the article, Matt Moffett explains how the middle class is growing throughout Latin America along with per capita incomes.
Moffett interviews one economist who says Walmart International’s Latin American investment reflects the company’s faith in the middle class in countries like Mexico and Argentina. When told some intellectuals questioned his optimism regarding the prospects for continued middle class growth in Latin America, the economist responds, “Who are you going to believe…an intellectual or Walmart?” (Full Story at WSJ.com)
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