Wal-Mart Is on a Roll—and That's Great News for the Recovery

The world is getting sicker. The U.S. is getting stronger.

615_Walmart_Reuters.jpg

Reuters

Shares of the world's largest retailer, Wal-Mart, are going nuts. Since catching fire in the middle of May, after posting strong earnings, the stock is up more than 27%. It hit an all-time high Oct. 10, closing at $75.42.

Why?

Some might think the price-conscious retailer's strength is a bad signal for the US economy, suggesting that Americans are moving to lower price points because of tight budgets. Such reasoning led many to expect that Wal-Mart would be a great bet during the great recession. Instead, the stock underperformed woefully, in part, because many American consumers were so strapped for cash that they turned to even cheaper retailers such as Dollar General and Dollar Tree. Here's a look at how Wal-Mart (blue) and Dollar Tree (yellow) performed from the end of 2008 to the end of 2011, in percentage terms:

So what's going on now? It seems like Wal-Mart's surge is yet another sign of US resilience at the moment, especially the US domestic economy, which is benefiting from what pretty much everyone says is a real turn in the housing market. In fact, Wal-Mart's recent rise looks (yellow) looks an awful lot like the upturns we've seen in other housing related entities such as Home Depot (purple) and the S&P 500 homebuilders index (blue). Here's a look at their performance, along with Dollar Tree (green) for good measure, since mid-May, when Wal-Mart started taking off:

In short, investors beware. You underestimate the US economy at your own risk. Of course, it remains to be seen whether the US economy can keep moving with all the negative headwinds blowing in from the China slowdown and European crisis.

Presented by

Matt Phillips is a reporter at Quartz, where he writes about finance, markets, and economics.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open For 1,300 Years

It's one of the oldest family businesses in the world.

Video

What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.

More in Business

Just In