Waltham, MA, November 4, 2005 - Global Insight, the private company that brought together DRI and WEFA, the world's most respected economic analysis, forecasting and financial information companies, today announced the release of a new study, The Economic Impact of Wal-Mart. This study, which analyzes the national and region impact of the nation's largest retailer on the U.S. economy, was presented at a Wal-Mart sponsored conference in Washington, D.C. on November 4, along with papers written on this same topic from other sources.

Global Insight reviewed a wide range of previous studies that indicate that the efficiencies that Wal-Mart has fostered in the retail sector have led to lower prices for the U.S. consumer. These results were supported by statistical analysis which found that the expansion of Wal-Mart over the 1985 to 2004 period can be associated with a cumulative decline of 9.1% in food-at-home prices, a 4.2% decline in commodities (goods) prices, and a 3.1% decline in overall consumer prices as measured by the Consumer Price Index-All Items, which includes both goods and services. The main driver of this impact was a 0.75% improvement in the overall efficiency of the economy. Increased capital intensity and lower import prices were secondary drivers. The 3.1% decline in the price level was partially offset by a 2.2% decline in nominal wages, so that the net effect was to increase real disposable income by 0.9% by 2004.

Major National Findings
Consumer savings for Wal-Mart shoppers were generated through Wal-Mart's higher levels of capital investment in distribution and inventory control, lower import prices, and greater efficiency of the overall economy through the application of improved technology and processes. With the estimated 3.1% CPI impact, total cumulative savings to consumers amounted to $263 billion by 2004, or $895 per person. The study also includes an analysis of the sensitivity of the results to changes in the CPI and wage impact estimates on which the study findings are based.

According to the study, Wal-Mart had a positive impact on employment nationwide, generating 210,000 jobs by 2004, a 0.15% increase relative to the number of jobs that would have existed without Wal-Mart. Labor market dynamics, embodied in Global Insight's Model of the U.S. Economy, resulted in nominal wages across the whole economy declining 2.2% by 2004. This decline was more than offset by the fall in consumer prices, creating an increase in real disposable income of 0.9% by 2004. "Consumers earned less in nominal dollars, but their income bought them more in the economy with Wal-Mart because of real disposable income gains," the study concluded.

Global Insight's analysis of employee wage data provided by Wal-Mart shows its wages are comparable to the retail industry average for positions in the same area, leading the study to conclude that Wal-Mart pays a market wage that fairly reflects the skills, experience and education it requires of its workers.

To address concerns raised by Wal-Mart's critics who argue that the company contributes to wage compression in the U.S. economy, the study provides an analysis testing how sensitive the results are to the study's wage findings. This analysis concludes that if a portion of the consumer cost savings generated by Wal-Mart were caused by compression of wages, the overall improvement in the efficiency of the economy and the increase in real income would have been lower, while the level of employment would be higher.

Regional Findings
To supplement the national analysis, the study includes an in-depth examination of the Dallas-Ft. Worth area where Wal-Mart has a significant presence. Consumer cost savings in the area are estimated at 4.0% by 2004. "The impact of the cost savings in conjunction with other direct, indirect and induced impacts has led to 6,300 more jobs and a 2.6% increase in real disposable income in the area," the study said.

The Global Insight study also included an analysis of the effects on the structure of county-level retail employment when Wal-Mart enters or expands in a market. The study shows that with the opening of a typical 150-350 person Wal-Mart, retail employment increases by an average of 137 jobs over the near-term and levels off to a 97-job increase over the long-term. It also leads to net job losses in food stores, and apparel and accessory stores, and net job gains in building materials and garden supply stores, and general merchandise stores. According to the study, while Wal-Mart does appear to displace other retail establishments in a county, it also serves to stimulate overall retail sector development.

Study Background

• A national impact analysis to estimate the overall impact of Wal-Mart as measured by commonly used measures of national economic performance;
• A metropolitan area impact analysis to characterize how the impact could be measured in a specific Metropolitan Statistical Area (MSA), Dallas-Ft. Worth, and to serve as an example for how Wal-Mart's economic impact should be estimated in other cities:
• A county level impact analysis to look at the specific dynamics associated with the impact of Wal-Mart's entry and expansion at the local (county) level.

The study was conducted using the Wal-Mart data, other publicly available data, and Global Insight's models of the U.S. national and regional economies. Global Insight also reviewed a wide range of previous studies that have examined how Wal-Mart has been able to offer lower prices to its customers and how this impact has spread to the prices of other retailers.

The scope of the Global Insight study did not include social and qualitative urban planning issues; impact on federal and state government assistance funds and programs; impact on specific segments of the population such as lower income vs. higher income consumers, unionized vs. non-unionized workers, and the like.

A copy of the Global Insight study, "The Economic Impact of Wal-Mart," and selected papers may be obtained by going to www.globalinsight.com/walmart.

Contact: