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Ida Hansen
Look to the Retail Sector for Proof of the US Economy Recovering

Growth for the United States economy just came in at 2.8%.

While that is a sign that the American economy is continuing to recover from The Great Recession, there will be more indicators this week.  Those will come from many publicly traded companies in the retail sector reporting earnings.  What Wal-Mart (NYSE: WMT), Kohl’s (NYSE: KSS), Nordstrom (NYSE: JWK), and others report will offer a great deal of insight into the rebound from the results of the third quarter.

Wal-Mart is the world’s largest retailer.  Kohl’s is the biggest department store chain in the United States.  Nordstrom is one of the largest upscale retailers. Each will offer a better view for certain segments of the United States economy.

Due to its size, $400 billion in annual, Wal-Mart is the most important.  Its last two reports have not meet the expectations of Wall Street, however.  In addition, management issued guidance earlier that was bearish.  But legendary investor Warren Buffett is a major shareholder, which is very bullish.

No matter what numbers are reported, the Amazon (NASDAQ: AMZN) factor must always be considered.

The Internet giant has experienced strong sales growth over the last five years.  While Amazon has increased sales growth by over 30%, it has been in the single digits for Wal-Mart and Kohl’s.  For JC Penney, sales growth over the last five years has been negative.

As the chart below show, the share price for Amazon has soared.

That should be kept in mind when Wal-Mart, JC Penney, Kohl’s, and Nordstrom report this week.  Amazon has cut into the sales base of all, especially in high end consumer electronic sales.  High margins always attract competition.  Based on what its stock price has been doing, it appears as if Amazon is winning.

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