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Jared Dillian

Are We in a Recession Now? Just Look at Discount Retailers

The shares of companies that operate so-called dollar stores have soared in one of the rare bright spots for markets. 

Discount retailers are a contrarian economic indicator.  

Discount retailers are a contrarian economic indicator.  

Photographer: Mario Tama/Getty Images

The biggest debate in financial markets is whether the US economy is already in recession, and that’s because the data is decidedly mixed. Inflation is raging, but the jobs market is red hot. Perhaps the answer lies with discount retailers.

Even though the benchmark S&P 500 Index is fallen into a broad bear market by tumbling 20.2% this year through Wednesday, Dollar General Corp. has risen 4.58%, Dollar Tree Inc. has surged 18.1% and Ollie’s Bargain Outlet Holdings Inc. has soared 33.2%. This is a stunning level of outperformance, and reflects the theory that as inflation accelerates, consumers will be forced to trade down to cheaper and lower-quality goods sold by discount retailers.