Walmart Loses $22 Billion As US Consumer Confidence Plummets

Billions were wiped off Walmart’s valuation on Tuesday, as data revealed a gloomy economic outlook among American consumers.

Walmart’s share price fell 3.1 percent by market close, resulting in its market capitalization falling by $21.89 billion on Tuesday, per Companiesmarketcap.com.

Why It Matters

With consumers already showing signs of reeling in their spending habits, as Walmart‘s CEO has recently warned, the retail sector could be hit hard if confidence fails to recover and the country continues on its path toward an economic downturn. Given consumer spending is estimated to account for over two-thirds of the country’s GDP, sustained low confidence could itself increase the odds of a recession occurring in the near future.

What To Know

Walmart’s $22 billion loss was the largest valuation drop on Tuesday, followed by chipmaker Nvidia, which experienced a 0.6 percent drop in its share price, leading to a $17 billion decline in its overall market cap.

The retail giant’s decline coincided with the Conference Board’s monthly report on American consumer confidence, which revealed another concerning drop.

The Consumer Confidence Index fell to 92.9 points in March, retreating for a fourth consecutive month and reaching its lowest level since early 2021.

The Expectations Index—a measure of consumers’ near-term outlook for income, business, and labor market conditions—fell to 65.2, its lowest point in 12 years and below the 80-point mark that the think tank said “usually signals a recession ahead.”

Consumers’ expectations of a recession within the next 12 months remained unchanged from February, while their evaluation of their current financial situation saw a slight improvement. However, the outlook on their family’s financial situation six months ahead dropped to its lowest level in more than two years.

What People Are Saying

Walmart CEO Doug McMillon in late February noted that “budget-pressured” customers were reducing their spending and displaying “stressed behaviors.”

“You can see that the money runs out before the month is gone, you can see that people are buying smaller pack sizes at the end of the month,” McMillon said.

Bill Adams, chief economist for Comerica Bank, in comments shared with Newsweek following the consumer confidence report, said: “The klaxon of layoff headlines, a falling stock market, and tariff fears were a big blow to consumer confidence in early March.

“The pullback in confidence is becoming a real threat to consumer spending which as is often repeated accounts for two thirds of U.S. economic activity.”

“Downside risks to the economic outlook have increased substantially over the last month,” he added. “People who are afraid the economy is headed into a ditch won’t buy new cars or houses, go out to eat, or go on vacations. If consumer sentiment continues to sour, spending will likely follow it lower and the economy could take a substantial hit.”

Stephen Miran, chair of the Council of Economic Advisers, told CNBC on Tuesday: “I just don’t think that there’s been a very strong correlation between the [consumer] confidence data and actual consumer spending in recent years. And if you go out in the street, people are going about their lives, you know, they’re getting their paychecks, they’re spending their paychecks. The economy is marching on ahead.”

“There’s a whole bunch of data for the economy that are pretty decent, and pretty darn good,” he added.

What Happens Next

According to Yahoo Finance, Walmart’s share price is up around 0.3 percent in pre-market trading on Wednesday, suggesting the company may recover some of the value lost on Tuesday.