Evidence Of The Squeeze Begins

Just when I thought I was standing alone and spitting into the wind comes news from Wal-Mart that adds some credence to my views.

From April 25th:

"I do feel that we're about to see the unintended consequences of the Fed's QE policy. Rising oil and commodity prices are causing input prices to rise, thus producers will attempt to begin passing through rising prices to consumers. The question is, will consumers pay up. Inflation is a foregone conclusion. What if the consumer scales back? The law of diminishing returns could soon affect earnings in a negative way."

Yesterday, the 27th, the world's largest retailer told it like it is. Bolded emphasis is mine.

NEW YORK (MarketWatch) — Consumers’ spending power has been affected in the face of rising fuel prices and other inflationary pressures, Wal-Mart Stores Inc.’s Chief Executive Mike Duke said on Wednesday.

The world’s largest retailer, which gets 140 million customers in its U.S. Wal-Mart stores alone every week, has seen more shoppers spending more on the first day of the month when they receive their paychecks, Duke said at The Wall Street Journal Viewpoints executive breakfast presentation in New York.

“Our customers are running out of money, buying smaller pack sizes and less discretionary items near the end of the month,” Duke said. “It shows greater pressure on consumers. Rising fuel price has been one of the factors that affect consumer spending. The end of paycheck cycle is pronounced among our core customers.”