Walmart CEO Warns of Consumer Spending Slowdown Absent Fiscal Cliff Deal
Walmart CEO Mike Duke says consumers will curtail spending this holiday season unless a fiscal-cliff deal is reached.
The chief executive of Walmart, the world’s biggest retailer, increased pressure on Congress on Tuesday by warning that millions of U.S. consumers will sharply curtail spending this holiday season unless a deal is reached soon to avoid the so-called fiscal cliff.
During an appearance Tuesday evening at the Council on Foreign Relations in New York, Walmart CEO and President Mike Duke said: “The customer is still fragile. This economic recovery is still very, very, close. We have seen some positive signs with information from consumers, but the positive signs have been very muted. The customers are still working to get by month to month, paycheck to paycheck.”
Duke disclosed that he shared Walmart consumer polling data with President Obama a week after the election, when a dozen top business executives visited the White House to discuss possible solutions to the fiscal stalemate. Duke said he told the president: “The week before the election only 25 percent—one quarter of our core customers—even knew what ‘fiscal cliff’ meant. One week after the election, it was up to 75 percent.”
Now, Duke continued, “These same customers, 15 percent of our customers, are telling us this discussion about ‘fiscal cliff’ will affect what they spend on Christmas.” Already, he said, consumers “downsize” their purchases at the end of the month as they run out of money.
Asked about Obama’s reaction, Duke said: “The president was very interested and engaged in the discussion and wanted more information … As a matter of fact, we started sharing more of our polling information with the administration, and I think it can be extremely helpful on an ongoing basis … I think the sensitivity of input from business has caused there to be more feedback provided for business.”
Walmart has more than 140 million customers a week in the United States alone, and female customers account for more than 70 percent of the buying decisions. Data gleaned from the chain’s massive customer transaction information bank gives Walmart a competitive edge in reading consumers’ views of their economic situation.
“We were doing a lot of polling of ‘Walmart Moms’” before the election, Duke said.
By arming President Obama with Walmart’s assessments of consumer behavior and sentiment, the company hopes to help push Congress to a wide-ranging compromise that will produce substantive reform on raising revenue and cutting spending.
“We do believe that this is a critical time for the country, and this needs to be addressed. We do think it is time for Congress to reach compromise on revenue increase, Duke said.
Without naming Republicans as holdouts, Duke continued: “Revenue increase could mean potentially addressing tax rates as well as elimination of deductions or some combination. We do think the administration needs to reach agreement on reduction of spending and entitlement reform. That would be significant.”
“We need a comprehensive plan that doesn’t keep this debate going and going,” Duke said. “The American consumer, our Walmart customers, are kind of ready for Washington to work together, for Congress and the administration to come up with a longer-term solution to the fiscal crisis.”