It should comes as no great shock that corporate America is very worried about weak consumer spending heading into another holiday shopping season kicked off by next month’s much-anticipated Black Friday.
But there’s a distinct dichotomy being discussed by economic experts that should make the retail sector rethink their position on the minimum wage – their own middle-class workers likely don’t have enough “consumer spending” in their own wallets to fuel their profit goals.
A recent report by the progressive think tank the Center For American Progress examined the formal corporate filings by America’s largest 100 retail companies to the Securities Exchange Commission and found that the greatest threat to their stock prices is low consumer spending.
Seven out of eight major U.S. retail companies cited weak consumer spending as a major risk factor to their stock price, with two-thirds of the largest retail firms saying lower income among customers is seriously threatening their business.
“The corporate consensus is clear: It is this cycle of stagnation - low wages, leading to weak demand, leading to slow growth, leading back to low wages - that is hurting companies, their consumers, and the U.S. economy at large,” the Center For American Progress concluded.
Writer Alana Pyke, from the political site ThinkProgress, concurred with the view that corporate America is currently attributing weak middle-class spending habits to a slow economy recovery.
“Wall Street analysts have also taken notice of the retail business’ focus on customer earnings. The report quotes analysts from Morgan Stanley, Bank of America, Citigroup, Wells Fargo, and a half-dozen other major business analysis firms that are not household names. Each of them points to weak consumer spending and the economic weakness afflicting the middle class as factors hindering the recovery,” Pyke said.
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