Dollar General CEO warns poorer Americans are running low on funds

After his company released the information declaring that poorer Americans run out of cash at the tip of the month, Dollar General CEO Todd Vasos said customers have told him they are increasingly concerned on the impact of inflation on their funds.

According to Dollar General sells a wide selection of products at low prices in rural towns or low-income communities. According to sales data, their sales numbers dropped significantly at the tip of the month, indicating that retail salesThis is attributed to families lacking funds.

Vasos said the principal customers for his company’s stores are households earning lower than $35,000 a 12 months. He said those households feel “financially constrained.”

Vasos continued: “Most say they feel worse financially than they did six months ago, as higher prices, lower employment levels and increased borrowing costs have hurt sentiment among low-income consumers.”

According to , Dollar General shares down 30% Aug. 29 after the corporate released its earnings report. Although the corporate blamed its poor sales on its customers’ economic concernsAnalysts say the rationale is probably going because different customers decide to shop at Walmart and Target, fairly than the plight of low-income families.

“The difference from previous economic periods where consumers were under pressure is that we’re not seeing the lower-end shopper (the more affluent shoppers who used to go to Dollar General to buy cheaper items) as much as we did in the past,” said Joe Feldman, senior managing director and deputy director of research at Tesley Advisor Group. “That shopper is shopping at Walmart and online more often. There are now a lot of other places where consumers in the mid-range and higher end can shop, and I think that’s what’s driving the pressure.”

In addition to the pressures Dollar General is facing, it was reported in 2023 that inflation was not an actual problem for the typical consumer, fairly high prices which persevered even after inflation fell.

High prices will persist unless people stop buying, said Rob Rich, director of the Federal Reserve’s Center for Inflation Research in Cleveland.

“Since the pandemic and since we started raising interest rates, we’ve actually seen a slowdown in the rate of inflation. Now… that doesn’t mean prices have gone down. It means prices aren’t going up as fast as they used to.”

Rich continued: “Episodes where prices actually fall can be really, really bad for the economy,” Rich said. If consumers expect prices to proceed to fall, they hold back on purchases and in the reduction of on spending, which might hurt businesses and affect employment. Deflation can be bad for contracts like mortgages and other debt instruments, he explained, since the sum of money borrowers need to pay is fixed, and if prices fall, that becomes a much bigger burden. “While everyone might initially think, ‘Oh, yeah, let’s just let all prices fall,’ that can actually be very problematic for the economy.”