Walmart CEO Doug McMillon just revealed a bleak outlook for the global economy.
In an interview on CNBC, McMillon was asked to comment on the US economy.
He shrugged and said: “It’s steady. It’s OK.”
He went on to address back-to-school sales and sounded unimpressed, calling them “pretty good.”
Back-to-school sales are a strong indicator for the holiday season, which is the most important shopping period of the year.
Looking ahead to the holidays, McMillon said, “Christmas will be fine.”
When asked why a drop in gas prices hadn’t provided a bigger boost to sales in the US, McMillon said consumers “had debt to address and other things going on.”
“They are just balancing in where they manage their budgets,” he said.
The problems have been occurring for more than a year.
Many Americans are watching their spending despite lower gas prices, Lindsey Piegza, formerly chief economist at Sterne Agee, wrote last year.
“Consumers are increasingly familiar with energy price reprieve from summer gas prices and no longer adjust their long-term spending habits as much, or at all, based on short-term price fluctuations,” Piegza writes.
And while gas prices are lower, the benefit is offset by higher housing and utility costs, according to Piegza.
Health-insurance premiums have increased by 39% to 56% since early 2013, meaning additional costs of $230 per month for the average family.
The lackluster job market is also contributing to poor sales at middle-market retailers like Gap and Macy’s, Piegza writes.
McMillon said he was less concerned about the US economy, however, and more worried about China.
“China’s a little tougher,” he said. “You just can’t think about China as a one-year endeavor – it’s a longer endeavor.”
Walmart announced earlier this year that it would be remodel existing stores while also investing heavily in China to expand its store footprint by one-third.
McMillon made the remarks shortly before Walmart announced Wednesday that it was cutting its profit outlook for the next two years, forecasting an earnings decline of 6% to 12%.
Following the news, shares of the nearly $200 billion company fell as much as 9%, marking the biggest single-day decline in at least six years.