Wal-Mart sees economy building momentum

NEW YORK — As a prognosticator of medium-term consumer spending habits, Wal-Mart is widely considered a seer without peer, and this week it offered Wall Street some fairly comfortable news.

Wal-Mart believes that middle-income households "are beginning to respond to the improvement in the economy," Jay Fitzsimmons, senior vice president and treasurer, told investors at the Merrill Lynch Retailing Leaders Conference here. "In other words, it's starting to trickle down."

Consumers at the bottom third of the economy have yet to respond to improvements in the economy, Fitzsimmons noted, a scenario that is common.

However, Wal-Mart's outlook is guarded due to several criteria: the fact that many consumers are still spending paycheck to paycheck, the impact of higher gas prices, a lingering weakness in consumer confidence and the torpor in new employment.

"We think the momentum we've seen will probably stick, although (the trend) could stall again until the bottom third starts to spend."