Thursday, April 7, 2011

A Crack in the Great Wall-mart: Watch Out for Rising Prices from China


In a widely covered interview last Wednesday, the CEO of Wal-Mart, Bill Simon, warned that “U.S. consumers face ‘serious’ inflation in the months ahead for clothing, food and other products.” He noted: "We're seeing cost increases starting to come through at a pretty rapid rate." Given his purview, I accept Simon’s opinion as positively disconcerting, and if inflation is to hit home in the heartland of America, it will certainly begin at Wal-Mart.

While America’s labor force struggles to regain employment and reclaim real wages, the prices of necessary products are preparing to surge, creating the uncomfortable prospect of stagflation, that dour economic phenomenon of rising prices and falling wages last seriously confronted three decades ago. It would be a toxic drink to swallow. Packaged in China for Sam’s Club, and mixed with a little Mexican Wage Gouging Tequila, this “stagarita” would leave a bitter taste in an election year. And what a hangover. (read more)