It just keeps getting worse for the Biden economy: Retail giant Target’s profits plunged a staggering 52 percent for the first quarter of the year, while the Dow Jones continued its freefall as it fell over 1,100 points in today’s trading.
What the heck is happening here? It’s not that complicated—rising fuel and freight costs due to Joe’s inflation have drastically cut into profit margins.
WATCH: Target’s quarterly profit halved and it warned of a bigger margin hit this year due to rising fuel and freight costs, in a clear sign there would be no immediate relief for U.S. retailers from surging inflation https://t.co/27vHXaJHa6 $TGT pic.twitter.com/FGDCHc6aXV
— Reuters Business (@ReutersBiz) May 18, 2022
“We have a lot of work ahead of us to restore profitability to the level where we expect to operate over time,” Target Chief Executive Brian Cornell said on a post-earnings call.
The company said costs will rise by an additional $1 billion, more than it had anticipated for the year.
Costs have remained elevated for companies also due to pandemic disruptions to shipping channels and the crisis in Ukraine. Target executives said the supply-chain woes would remain until at least 2023.
Another factor hitting retailers: spooked consumers are putting off big purchases like bikes, TVs, and kitchen items compared to the last few years. I’m sure as heck not buying a new refrigerator any time soon, are you? Per CNN:
Target shoppers are concerned about “the high and persistent inflation they’ve been experiencing, particularly in food and energy,” Cornell added during a conference call with analysts.
The Dow meanwhile dropped over 1,100 points for its worst day since 2020, ending the day 14 percent lower than at the beginning of the year. News like this can only heighten the worry over the dreaded “R” word, as The Wall Street Journal points out:
The results are prompting Wall Street to wrestle anew with the idea that the global economy could be headed for a recession. Though the debate is far from settled, it has rattled stocks and other risky assets throughout the year, with the latest data illustrating the degree to which inflation has hit U.S. consumers.
Is Joe Biden coming to the rescue anytime soon? Doesn’t sound like it. As my colleague Bonchie points out, Biden’s newly-minted Press Secretary Karine Jean-Pierre says of the administration’s attention to the stock market: “We do not—that’s not something we keep an eye on every day.”
Well, they might want to pay a little more attention, because these terrible numbers affect you, the voters. Inflation doesn’t just slam the stock market, it affects our everyday lives, from food costs to nasty gas pump surprises to vacations. The numbers are grim:
Annual inflation rate in the US slowed to 8.3% in April from a 41-year high of 8.5% in March, but less than market forecasts of 8.1%. Energy prices increased 30.3%, below 32% in March namely gasoline (43.6% vs 48%) while fuel oil increased more (80.5% vs 70.1%)… Despite the slowdown in April which suggests that inflation has probably peaked, the inflation is unlikely to fall to pre-pandemic levels any time soon and will remain above the Fed’s 2% target for a long time as supply disruptions persist and energy and food prices remain elevated.
Biden can blame Ukraine, supply chain issues, his dog, none of it matters. When you’re the captain of the ship, you are responsible when it crashes.
November 2024 can’t come fast enough.