WalMart actions show underemployment the biggest problem in the economy – bearish for stocks
Sam Adelton
Nov. 14, 2006

Wal-Mart Profit Increased 11%. It was great news on the surface. The consumers are back you may think. But think about what WalMart had to do to increase their sales? They had to cut prices aggressively. Yes consumers had some extra cash in the pocket from stable gas prices at the pump but that extra cash is going to pay increased credit card payment.

The WalMart results finally manifest the biggest problem of the economy. It is underemployment. People in Main Street are feeling poorer because salaries are not going up compared to real inflation. While official gauge of inflation is between 2 and 3%, the real rate is above six percent. Look at the cost of residence, transportation, college tuition and health care cost. You get it right – inflation is rampant while growth is meager.

The biggest problem is lack of innovation. The effect of cutting research and development budgets that started in eighties is finally creating a massive problem. The lack of innovation creates the problem of pricing power inability. You just cannot survive making iPods for ever. That is no innovation in technical sense. It’s a joke!

The lack of innovation causes underemployment. Every one is scared of high human resource cost as the revenue is stagnant or even decreasing in many cases.

The net result for the stock market can be horrific. The biggest enemy of stocks is inflation and lack of growth. The companies now are faced with coming out with the truth – the real financial books not the made up ones. The same attitude that caused the ‘Options Backdating’ scandal now will start creating problems for the stock market as financials are revised.

WalMart actions show underemployment the biggest problem in the economy – bearish for stocks
Sam Adelton
The WalMart results finally manifest the biggest problem of the economy. It is underemployment. People in Main Street are feeling poorer because salaries are not going up compared to real inflation.
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