Why Walmart's Warning Means Trouble For Shoppers!

Walmart CFO John David Riney just warned that thanks to new tariffs, prices could start rising by the end of the month. Everything from bananas to electronics is about to cost more. And when Walmart says that, it's not a prediction, it's a spoiler alert. Now here's the funhouse mirror part of this. Back in 2024, US inflation was 2.9%. That's lower than the UK's inflation rate, which is 4.2%. Germany had 3.5%, France, 4.0%, Italy, 5.7% Canada, 3.9% and basically all of Europe. And yet it was treated like your paycheck had been set on fire. But now, with forecasts like Goldman Sachs predicting 3.8% inflation by December, suddenly the new message is inflation totally normal, not even worth discussing. Here's the problem. You can't scream house fire and then there's a candle burning and then shrugged when the whole kitchen's actually going up in flames. Sooner or later people smell the smoke. So in here in the United States, there was a huge, huge political issue 2023, 2024 about how inflation was absolutely running rampant crazy because of specific government actions by the administration in power. When you actually looked at the facts, what you found was that inflation was higher in all the big countries, big prosperous economies, the United States, compared to most of Europe. Here's the thing few people got. It didn't seem to matter whether those governments ran up deficits, did a lot of stimulus to help people get out of COVID or not. Some countries had relatively austere budgets. They still had higher inflation than the United States. I say this not because I'm trying to defend the previous administration. Now we have a situation where top leaders at CEO Target other companies are suggesting we're going to have really high inflation because of recent policies involving tariffs. What we are starting to see from supporters of the current administration is in the media is essentially this. Inflation doesn't matter because it's for a higher purpose of bringing back manufacturing to the United States. The message is if there's short term pain, but it brings back high paying manufacturing jobs, United States will all be worth it. So here's where we got to tease this messaging out because it gets a little confusing. The message two years ago, a year ago was okay, maybe there is some inflation and maybe deficit spending and increased spending caused it. But it's for the higher purpose of not having dramatically higher unemployment, which is what you typically get in a recession, which had been predicted that didn't wash Politically, the last administration was swept out of office. Its poll ratings are still low, in part because people found that argument compelling. They really believed, and I'm not here to discount their feelings, that inflation was too high. But now we do have a situation where inflation could all of a sudden get a lot higher than it was a year ago. The difference being, it may be that the United States has much higher inflation than other larger economies relative to our own or relative to others, and that unlike last time, when our inflation rate was actually lower, it's higher than the people we compare ourselves to. So how do you spin that? There are a few ways of doing it. One way is to simply say, disregard what various officials are saying about inflation. The numbers are wrong, the books are cooked. In theory, that could be said. I don't know if people are going to the grocery store and their eggs are suddenly 100% more than they were last week, if that's going to be convincing. The other argument is, frankly, that it's for a higher purpose. Here's the problem with that. And I'm not here saying that the public is always rational and that I'm always rational. That's not what I'm saying. But typically there needs to be some thread of rationality. The problem here is I simply don't know of a single economist in the United States or around the world whether they are liberal, centrist, conservative, right of center, libertarian, who sees how the current tariffs are actually going to and propose tariffs at varying stages will bring back manufacturing jobs of pens and electronics, things like that, to the United States. Now maybe it does, but I haven't seen any economist voice that opinion. There are opinions coming from the current administration saying that, but it's a lot tougher to communicate that message if you don't have any outside validation. Right now, inflation rate is not high. It hasn't gone up much, so there's no immediate crisis communications problem. But if the CFO of Walmart is correct, the CEO of Target and others are correct, and we do see rapid inflation, you're going to have a crisis communication situation and I don't know how the current administration gets out of it. I'd love to hear from you.