Thursday, November 13, 2008

Walmart lowers forecast on 4th quarter earnings; that's less buying and a $1 billion deficit for TN

Walmart is kind of a barometer for the forecast on the nation's economic health and future.

Today, it reported big profits for the third quarter, yet the price of its stock declined. Why? The global retailer lowered its expected earnings for the fourth quarter, which includes the holidays.

Holidays make or break many retailers. They depend on most of their revenue during that period. But growing layoffs, plummeting 401ks and rising fear have left people less intent on buying this holiday season. So that means more people will be laid off and less sales tax revenue will be coming into states and communities.

For Tennessee, that means lawmakers in January may well face at least a $1 billion budget deficit for the current fiscal year. The number is shocking. But it is indicative of the grim future awaiting decisionmakers.

And as most politicians, they'll let this bad news roll down hill. That means your county and city leaders will have to decide how much to cut of your services and/or raise your taxes during a recession.

Walmart is telling us to beware the months to come. It is going to be terrible.

1 comment:

Tony L. Williams said...

Whatever happened to the old saying, "When the going gets tough, the tough go shopping?"

With deflation, stocking necessities may be a great idea to save money in the long run.

Oh, if the tough go shopping, where does that leave me?

Because frankly, I'd rather take a beating than go shopping.

Or as my father once put it, "If I had wanted to stand in lines, I would have stayed in the Army."

Tony L. Williams
Richardson, Texas