Walmart is sending a huge warning about the US consumer right now their most recent financial report showed a huge surge in the number of discounts that Walmart offered and the amount of high income people who are now trading down to Walmart because they can no longer afford going to stores like Whole Foods to shop for groceries when a store like Walmart starts doing well and offering deep deep discounts that's actually the sign of economic struggle the revenue went up 4. 2% year-over-year which was above estimates in fact if you go back to the mid-2000s in 20072 2008 during that last housing crash and financial crisis Walmart's Revenue grew every year through that financial crisis now here's what you got to understand everyone Walmart is essentially a grocery store at this point over 60% of their sales come from grocery items and they're actually the cheapest place that you can now get groceries which is why lots of people are flocking here during tough Economic Times and I actually did a little comparison everyone I went to Publix a local grocery chain down here in Florida and I looked at the prices of four or five different things and I compared it to what the prices were at Walmart and the results absolutely shocked me take a look at this all right everyone the first thing we're going to test here is soup Campbell soup it was a $1. 99 at Publix you can see here at Walmart the soup is $172 next thing we're going to test is eggs at Publix a carton of 12 eggs pretty generic looking was $434 you can see here at Walmart a carton of 12 eggs is $2.
94 cents now to the good stuff everyone steak top sirloin steak 8. 99 a pound at Publix verse 8. 94 a pound here at Walmart now we're going to go to the last food item I decided to compare Bread on this one Walmart wins by a long shot at Publix a loaf of white bread was around $4 absolutely crazy here at Walmart $1 $1 for a loaf of white Italian bread and I'm personally curious everyone do you guys shop for groceries at Walmart do you go to Walmart a consistent basis let me know in the comments section below what you think about Walmart because I know there's a lot of controversial opinions surrounding Walmart particularly their ability to drive prices down and cause a lot of local small businesses to go out of business there have been several different economic studies done over the last couple decades that have found that when Walmart goes into a neighborhood it does cause a reduction in the number of local small businesses because they simply can't compete with Walmart on price and this is something that's a double-edged sword everyone on one hand it's a good thing that in an inflation riddled Society there's at least one store that's able to at least stop increasing prices that's good for consumers but on the other hand being a small business in America right now is very very tough small business optimism is close to the lowest level it's been in the last two or three decades if you don't have access to Capital as a business if you don't have access to the supply chain you have way less pricing power I mean if Walmart wants to cut prices they just tell their suppliers to cut prices and they do it I've even heard stories that Walmart requires some of their suppliers to set up a headquarters in Bentonville Arkansas where Walmart is headquartered just so they can exert even more control over the suppliers on the store shelves now to bring this back to the original Point everyone the economy is slowing and Walmart's relative success is a sign of this economic slowing because it shows how desperate consumers have been for discounts and they're now trading down to shopping at Walmart but what's interesting is that while Walmart's been successful a company like Dollar Tree you can see the Dollar Tree behind me has not been Dollar Tree and Family Dollar they're owned by the same company is the second largest retail chain in America in terms of store count only behind Dollar General and so this is the typical discount dollar store actually nothing really costs a dollar anymore you walk into Dollar General you're paying five six s $10 for different items and their stock price at Dollar Tree is down 33% year to date and their revenue is missing estimates and is close to being on the decline and their earnings are dropping and the reason why is actually Dollar Tree is now more expensive than Walmart in terms of grocery items it's it's literally crazy how we're just seeing such a bifurcated situation in the US economy where two stores right next to each other that both offer discount offerings are doing so differently in terms of their success and I think this helps explain a lot of the confusion in the economy as well I know a lot of people out there are confused about what's actually happening but it seems like every day we hear a new story about either the things are good or things are bad depending on which company reports earnings or depending on which data point comes out but I think the thing to take away here is that consumers in America are most definitely struggling consumer sentiment is at a very low level outside of the pandemic inflation of 2022 this is the lowest consumer sentiment since the 2008 crash at the same point consumer savings rates are at the lowest level since right before the 2008 crash while credit card delinquencies have now spiked to the highest level since the beginning of the 2008 crash you keep hearing the parallels with 2008 the consumer is weakening in a very similar way and eventually a broader increase in the unemployment rate everyone we've already seen unemployment go up from 3.
4 to 4. 3% over the last year that's likely to increase higher into the future because historically once unemployment gains a certain momentum it tends to then Skyrocket at a certain point because there's a self-fulfilling prophecy consumers spend less money then there's more layoffs which means consumers spend less money and then there's more layoffs so if you're someone trying to Peg the odds of if we're going to go into a recession or not look at these data points and understand that that does seem to still be the direction we're heading the question is just just how big is this recession going to be because in terms of the housing market everyone we are still in a massive bubble in neighborhoods like this in Pell's Park Florida home prices are as much as 30 maybe even 40% overvalued from their long-term Norms the last time we saw these overvaluation levels was the ' 07 bubble before the big crash and I'm going to show you a listing here in a second that's going to show you just how big this bubble is I couldn't believe the price on the house I'm about to show you but I want you folks to First understand why this data on Walmart is relevant right the fact that Walmart is showing you that it's not only low-income consumers that are struggling it's middle to higher income consumers now that are also really having to start to budget and dial back their spending that's how bad the inflation of the last three years have become particularly for grocery prices everyone groceries are up 20% the last three years rent down here in Florida is up 25% the last three years and even though the prices of some of these things are starting to go down now the absolute level is still way too high relative to the local income and wages and ultimately it's the local income and wages that matter most in terms of dictating affordability and stability in the local economy and housing market and the problem here in Florida is that the cost of everything just went way up way past wages way past incomes this is a service-based economy down here you can see I'm right next to a a mobile home park where you know there's actually a lot of mobile home parks in Florida you see them kind of interspersed first with you know regular neighborhoods with homes on foundations you know it's it's a situation where a lot of people just can't afford to live here anymore and a lot of people are being forced to leave unfortunately because of that and go to States like Alabama where it's more affordable and this is why everyone houses like this it's a two- bed one bath 1100 ft on the market for $310,000 that's around $280 a foot for a house that I can guarantee you at the bottom of the last crash probably didn't sell for more than 50 or 60,000 so the prices since the bottom of the last crash they've gone up 500% 600% in neighborhoods like this and as long as you still see listings like this in your area you still know that there is a bubble absolutely raging right now the prices here in Florida have started to come down median list prices are down 5 6 7% from Peak however that's not enough that's not enough to bring buyers back in people can't afford it you go next door looks like we got a vacant abandoned home next door so 310,000 to be next to a an abandoned home in penel park that's what you got to pay right now and people aren't having it they're not doing it the buyer demand here is way way down and when the buyer demand goes way way down and the inventory goes way way up that's the signal of a crash data on reventure app shows that the for sale inventory here the active listing count has absolutely skyrocketed so I want you folks to think about this we got skyrocketing housing Supply down here we have prices which are dropping but are still very overvalued mixed with concerning economic warnings coming from companies like Walmart Home Depot McDonald's and Starbucks however it's important that you understand what this actually signals about the economy because there's a lot of people who got this earnings report from Walmart wrong they thought it was a positive sign for the economy they said what recession there is no recession Walmart's doing really really well no folks when Walmart does well it means the rest of the economy is struggling in fact if you go back to the mid 2000s in 20072 2008 during that last housing crash and financial crisis Walmart's Revenue grew every year through that financial crisis Walmart never had a decline in Revenue during that period whereas a company Like Home Depot who I talked about last week Home Depot saw an 18% decline in Revenue during the last crash and so we're actually seeing some of the same things play out this time that we saw 15 years ago Walmart being resilient due to their discounting in low prices Home Depot struggling due to their exposure to the housing Market that suggests that a crash is around the corner one data point I'm actually really interested in right now is a data point called salary needed to afford a house we just added this data point to reventure app and it shows you for every zip code in America how much money you need to make to afford a house in that zip code based on the mortgage and tax payments at a 30% cost ratio so you can see down here in St Petersburg Florida there's big differences in salary needed to afford a house certain zip codes where you can make $78,000 and still qualify other zip codes where you got to make over 200 Grand just to get in the door this is going to be one of the best ways to understand if you're a buyer looking in a new city or looking in your area trying to find some new places to buy where you can afford the homes of course make sure to combine that data point with the overvaluation rate so you also know the downside on prices if you buy right now head to ww.
