Expect a Rough Road Ahead for Retailers

The U.S. economy shrank by 0.9% in Q2. That follows a contraction of 1.6% in Q1.

On top of that, U.S. consumer confidence fell in June.

All of this does not bode well for retailers. Here’s a July 26 Yahoo! Finance headline:

Here comes a ‘flurry’ of retail bankruptcies, former retail CEO warns

The CEO says that if the 2022 holiday season is lackluster for retailers, expect a lot of bankruptcies in Q1 of 2023.

The monthly Elliott Wave Financial Forecast has been on top of this unfolding retail story. These charts and commentary were in the June issue:

Retail is suddenly another economic quagmire to watch, as May brought word of disappointing earnings and lower expectations for the balance of 2022. These charts show the hit taken in the shares of Walmart and Target. It turns out consumers are not as resilient as the experts said they were in late April. In fact, Wall Street wrote off the first quarter’s “surprise [GDP] contraction” as “misleadingly weak,” because consumer spending was “quite sturdy,” as one financial publication put it. The May issue of the Elliott Wave Financial Forecast begged to differ, citing a “consumer funk” which should now intensify.