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Wal-Mart’s freaking out about the economy. Should the rest of us?

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“Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

On Friday, Bloomberg published a couple of internal e-mails from Wal-Mart executives panicking about the company's worst sales start in seven years — "a total disaster," as one put it. The execs attributed Wal-Mart's slump to the payroll tax hike that kicked in on Jan. 1, cutting the median family's take-home pay by about $1,000 this year.

So if Wal-Mart is struggling, does that mean everyone else should worry? There are two ways to look at this. The first is that this is a terrible omen. Wal-Mart makes up such a huge chunk of the U.S. economy — 2.3 percent of GDP in 2006 — that many analysts look to it as a key bellwether. Matt Stoller wrote an excellent post last year on this topic:

Because of its scale and remarkable amount of data, the company actually has more granular data about the economy than most macro-economic forecasters. As Fed Board Governor Randall Kroszner said in a June 2006 meeting, Walmart officials "effectively know what retail sales are before the numbers are reported because their sales are so highly correlated with overall retail sales.”

Stoller combed through transcripts of meetings from the Federal Open Market Committee over the years and found that Wal-Mart was often warning about signs of trouble in the economy long before anyone else:

In 2004, Walmart began warning of high energy prices, and that consumers were “liquidity-constrained”. The company saw in its sales figures that consumers were increasingly living paycheck to paycheck. In 2005, the company began worrying about a “strange” situation – the consumer was tapped out, but sales were up and Walmart couldn’t figure out why. This was a hint of the credit bubble, but the Fed ignored it.

In other words, pay attention to Wal-Mart. They often know something the rest of us don't.

But if gloom's not your thing, there's another way to look at Wal-Mart's woes. Perhaps the firm is simply falling prey to competitors. Back in 2008, Emek Basker, an economist at the University of Missouri, published a paper suggesting that Wal-Mart actually does better in weak economic periods. The theory here is that Wal-Mart is an "inferior good" — when times are tough and incomes are falling, consumers switch to shopping at the cheaper retail giant.

The flip side of that: When the economy rebounds, Wal-Mart's higher-priced rivals do better. As it happens, Target's sales rose 3.1 percent in January, part of an overall uptick in merchandise and department store shopping. So it's very possible that Wal-Mart's woes are just specific to the company — and not part of a broader trend.

Further reading:

--This year's payroll tax hike wiped out a year's worth of wage gains, though economists are still unsure how consumers will respond to the cut in take-home pay. Will they cut back on spending, or just start borrowing more?

--Matt Stoller's post on Walmart is worth reading in full — among other things, he notes that there's evidence the company raises wages in response to the threat of protests and strikes.