That said, Felix’s corrections still propagate incorrect math. For someone who’s complained about innumerate journalists, that’s somewhat egregious.

If you think the conclusions or methodology are wrong, and don’t pass a gut check, say that. Don’t post comments confusing an annual savings rate with the change in an annual savings rate.

First, when comparing identical products, there is evidence that Wal-Mart prices may not always be the lowest, particularly for electronics goods — see http://www.theamericanconsumer.org/2009/ 11/10/american-consumer-institute-releas es-study-finding-no-difference-in-consum er-electronics-prices-between-wal-mart-a nd-best-buy-study-calls-for-wal-mart-to- improve-on-shelf-labeling-to-ensure-shop pers/. Deutsche Bank and others have shown similar results. So, attributing all of the retail industry’s savings to Wal-Mart is certainly wrong.

When comparing products that are not identical in terms of quality, buying cheap goods does not mean lower prices. The Consumer Price Index (CPI) compares like items over time. So, if one retailer offers and sells a lot of low quality products, the price of the good (and the CPI index) does not have change. The Bureau of Labor Statistics, which measures the CPI, is responsible for considering this quality adjustment.

Also, comparing a cumulative savings (reported in the study) with annual family income is misleading — the reported 1985 savings is being counted 24 times, the 1986 figure 23 times and so on.

In addition, since the retail industry’s economic output consists mostly of intermediate sales, the use of total factor productivity to determine savings should be based “value-added” basis, not final sales.

Finally, translating productivity change into pure price reductions is also improper, since there are other factors to consider, such as the sector’s price recovery and its profits. (There has been no cumulative shareholder value?) There are other problems too, such as issues involving present discount value adjustments, but I will stop there.

Steve Pociask
President
American Consumer Institute

The question is: what would the average family pay this year with WMT and without WMT? The delta is $3,100 according to the research – THAT is the definition of the saving.
Sure if you set the clock back to today and look forward one year it is $129 but the following year it would be $129+$129…

However, to suggest the average family spend $86k is a fact that can be readily checked, and of course turns out to be totally bogus.
Gross up that spend with say 30% tax takes it to $123k.
Two wage earners per family, means c.$60k each. If only. Average wage is closer to $30k.

There’s also the question of the impact of WalMart on wages and benefits. Can’t see making the case that that’s been positive. Race to the bottom, etc.

Walmart needs to re-evalulate their strategy. I wish there was better competition. If there was a store that sold Items that were “made in the u.s.a. I would pay that little extra. That would mean there were jobs, families eating and paying bills, and money staying here.

This blogging business is obviously all about quick quips and the process thankfully allows for updates like Salmon eventually posted, but my goodness. Do some real work first.

Felix asks “How can they possibly justify saying this”? Easy, they learned it from the Bush administration, which would say anything it wanted, regardless of whether it was true. You guys in the media make such a big deal about reality (well, some of you do) – movies don’t have to be true, why does the news? It’s just another form of entertainment to most news companies. And advertisements – nobody believes them anyway, so why can’t they lie?

The methodology of the estimate can still be questioned, but you’re math is misleading.