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Pain at Walmart, Target Is a Good Sign for Slowdown-Minded Fed

  • Retailers’ eroding profitability could help control inflation
  • Consumers spending more on experiences, less on merchandise
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WATCH: Target stock tanks the most in one day since 1987.Source: Bloomberg

US consumers are shifting their dollars from merchandise to services like travel, a worrying trend for retailers that benefited from the pandemic spending binge but a promising sign for snarled supply chains and inflation.

For months, economists have been expecting demand for merchandise to wane as Covid fears subside and Americans spend on experiences such as vacations and entertainment. The expectation was that a decline in spending on goods would ameliorate supply-chain pressures and help to tamp down decades-high inflation.