What Wal-Mart and Costco Tell Us About the Economy; Report by Profit Confidential

In the retail sector, sales have been mixed, with discounters and big-box stores faring the best, as shoppers flock to Wal-Mart, Target and Costco stores. According to George Leong, contributor to popular financial newsletter Profit Confidential.

New York, NY (prHWY.com) February 14, 2012 - In the retail sector, sales have been mixed, with discounters and big-box stores faring the best, as shoppers flock to Wal-Mart, Target and Costco stores. According to George Leong, contributor to popular financial newsletter Profit Confidential, the way consumers spend will likely dictate how the economy will fare in 2012.

"The reality is that consumer spending drives GDP growth," says Leong. "With consumer spending accounting for about 70% of the GDP growth in this country, it will be critical to get consumers to spend."

Leong highlights several key drivers for spending, including job creation and wealth generation from such sources as stocks and housing. In 2011, he says, all of these variables were absent, but spending managed to edge higher.

"Job creation is the most vital variable for the retail sector," says Leong.

A strong U.S. housing market is also critical for the retail sector, according to Leong, as homeowners tend to buy new furnishings, including many big-ticket items.

"This is not happening, as home prices continue to decline, dragged down by continued high foreclosures," writes Leong. "Just take a look at the stalling electronic and furniture sales."

Leong believes that foreclosures are driving the buying and this does not bode well for housing price appreciation. He believes that it may not be until 2013 until prices start to steadily rise.

"Jobs, confidence, and higher home prices are needed to drive spending in the retail sector. Only under this scenario will there be sustained spending and economic growth," says Leong.

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it "begged" its readers to get out of the housing market...before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com.

Profit Confidential is Lombardi Publishing Corporation's free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi's current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.

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Tag Words: economy, michael lombardi, retail sector, housing market, gdp growth, profit confidential

Categories: Business

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