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  Date / Time: 8/15/2009 12:30 AM UTC

  You Can't Spend What You Don't Have?WE NEED SAME HEALTH CARE YOUHAVE ?
  

  With ever tightening credit standards, and credit card companies like Chase (JPM), American Express (AXP) and Citigroup (C) slashing card limits, buyers are very mindful of costs as Pay Raises Are the Worst in 33 Years.
  

  Feel like your company has been particularly stingy on the raises this year? You're not imagining it. For 2009, the typical non-hourly worker will see a 1.8% bump in salary, according to a survey by the human-resources consultancy Hewitt Associates. That increase, the smallest in at least 33 years, doesn't even keep up with inflation.
  
  Going back to the early 1990s, base salaries never increased by less than 3.4% a year, according to Hewitt, which polled 1,156 large companies to get its latest data. Companies desperate to slash costs are turning to worker salaries more deliberately than they have in the past. Some 48% of companies have frozen salaries this year, compared to just 2% last year.

  Actually 1.8% more than keeps up for inflation. I have the CPI at -6.2% while the official CPI is -1.3% as discussed in What's the Real CPI?
  
  However, you can't spend what do don't have, especially if you have no job and no credit. Note that an unprecedented 4.4 million workers have been unemployed and looking for work for 26 weeks or longer. Indeed, various Social Safety Nets Mask A Deflationary Depression.
  
  Diving Into Retail Sales
  
  Dave Rosenberg dove into retail sales in Thursday's Lunch With Dave.
  

  If there was ever going to be a month where retail sales were going to rise, this was it — due to the “successful” Cash-for-Clunkers program. The program may be a “success” but all the government is really doing is taking away from future spending. The 2010 outlook for auto sales is going to be even further muddled as a result, but the hope is that by then, the economy will be kicking into higher gear. (J.D. Power published a new forecast for U.S. vehicle sales for 2010 and while it sees 15% annual gain from the depressed 2009 level, at 11.5 million units, that would merely be stagnant from the stimulus-induced tally in July). If not for that gimmick, sales would have actually declined around 0.7%, by our reckoning.
  
  Furniture sales slid 0.9% and are flat or down in each of the past five months. Ditto for building materials, which collapsed 2.1% in July. So, if “stabilization” is really emerging in the residential real estate market, it certainly is not showing through in the derivative housing-related segments of the sales data. Electronics sales tumbled 1.4% and now down sequentially in every month since March. General merchandise sales (mostly department stores) dropped 0.8% in July and have also lost ground in every month since the brief spurt we saw in February. Sporting goods stores sported a 1.9% plunge in July, the second outsized declines in the past three months. Web-based sales basically stagnated last month. What is called “retail control”, which is the headline excluding gasoline, building materials and autos, and goes into the consumer spending segment in the GDP data, fell 0.2% MoM and is flat or down in each of the past five months, and this was in the face of some pretty massive fiscal stimulus. So far in 3Q, retail control has declined at a 1.3% annual rate. So for the current quarter, GDP gets a boost from inventory building but 4Q could be flat or negative in the absence of a consumer pickup.
  

  Walmart Cuts Prices
  
  Inquiring minds are digging into details of the Walmart's (WMT) beat the street numbers. Please consider Walmart Profit Tops Estimates on Inventory Management.
  

  Wal-Mart Stores Inc., the world’s largest retailer, reported second-quarter profit that exceeded some analysts’ estimates after managing inventory to reduce costs. Comparable-store sales trailed the company’s forecast.
  
  Walmart will accelerate efforts to cut costs after U.S. stores reduced inventory by almost 6 percent, Chief Executive Officer Mike Duke said today on a recorded call. The chain also attracted more customers, helped by price reductions on its Sam’s Choice Black Angus beef patties, baked beans and flat-panel televisions to lure consumers grappling with shrinking paychecks and the worst unemployment since the Great Depression.
  
  “They are providing great value to the consumer, but the consumer is very stressed these days,” Craig Johnson, president of retail-consulting firm Customer Growth Partners LLC in New Canaan, Connecticut, told Bloomberg Television today.

  From baked beans to Black Angus beef to flat panel TVs, Walmart is lowering prices. Sales were lower but profits were up on "inventory management". Others are cutting prices too.
  
  Safeway Lowers Staples Up To 25%
  
  The Washington Post reports Safeway Lowers Prices To Lure Frugal Shoppers.
  

  Safeway has lowered prices on thousands of items at its stores in the Washington region as the supermarket chain adjusts to shoppers' increasingly frugal mind-sets.
  
  The grocer, the second largest in the region, is slated to announce the initiative Wednesday with banners and signs throughout its stores. The price cuts primarily are targeted at staples sold in the center of each store, such as paper products, laundry supplies and coffee, and the reductions run as high as 25 percent.
  
  Giant Food undertook a similar initiative in 2006. Even Whole Foods has cut prices on key items. Use of its coupons has grown to nearly 4 percent, the company said.

  Huge Attitude Adjustments For Store owners And Consumers Alike
  
  The article also point outs that 82 percent of consumers reported making shopping lists in June, up from 70 percent in January. Those comparing store ads rose to 64 percent from 52 percent. And in a number bound to increase, 46 percent said they shop at several stores based on price, compared with 37 percent in January.
  
  Ironically, consumer changes have forced Safeway's hand immediately after it spent several years upgrading the perimeter of its stores to help the chain compete with upscale grocers such as Whole Foods.
  
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