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Wal-Mart's weak forecast show how poor and middle-class is being squeezed
NEW YORK (AP) â¿¿ As go the fortunes of many Americans, so goes Wal-Mart's, and so goes the economy.
Even as the world's largest retailer on Thursday reported a nearly 9 percent rise in fourth-quarter profit during the busy holiday shopping season, it offered a weaker forecast for the coming months. The problem? The poor and middle-class Americans that Wal-Mart caters to â¿¿ and who are big drivers of spending in the U.S. â¿¿ are struggling with rising gas prices, delayed income tax refunds and higher payroll taxes.
Wal-Mart is the latest in a string of big-name companies from Burger King to Zale to say those Americans are being squeezed by new challenges. But since Wal-Mart accounts for nearly 10 percent of nonautomotive retail spending in the U.S., it is a bellwether for the economy.
"Wal-Mart moms are the barometer of the U.S. household," said Brian Sozzi, chief equities analyst at NBG Productions who follows Wal-Mart. "Right now, they're afraid of higher taxes and inflation."
Oil prices down sharply for a 2nd day
NEW YORK (AP) â¿¿ Oil prices plunged for a second day Thursday, raising hopes that a relentless rise in gasoline prices may slow or reverse at least temporarily. U.S. benchmark crude oil fell $2.38, or 2.5 percent, to finish at $92.84 per barrel in New York, the second drop of 2 percent in two days.
Crude oil's recent slide is a result of ample supplies and recent speculation that the Federal Reserve may soon allow interest rates to rise, which would reduce the supply of easy cash investors have been using to buy commodities like oil.
The drop in crude hasn't translated into lower pump prices â¿¿ yet. The average U.S. retail gasoline price rose a penny to $3.78 per gallon Thursday, according to AAA, the Oil Price Information Service, and Wright Express. Gasoline has risen for 34 days straight since averaging $3.29 on Jan. 18.