Consumer confidence is starting to pick up in the face of lower gas prices, former Wal-Mart CEO Bill Simon said Monday in a turnaround from his comments in July that the job market recovery was not spurring shoppers to spend.
"Gas prices do a lot not only for customers' wallets, but for their psyche in general. It's a really big boost. Gas is an emotional purchase, as you know. People drive all the way across town for 2 or 3 cents a gallon. And now with gas at about half of what it was a year ago, I think consumer confidence is really starting to pick up," Simon said in an interview on CNBC's "Squawk Box."
The price at the pump is one of the most important factors in determining spending at the low and middle end of retail, he said.
But citing flat wages, he said the economic recovery is uneven despite job gains. "The middle and the bottom of the economy is not having the same pace of recovery as the top of the economy, and that's really an important factor as we go forward," he said.
The mechanism for job growth in the middle tier is missing, and the United States will not see robust growth until it creates jobs in that area that low-wage workers can advance to, he said. Workforce development is key to the ability to lift the entire middle part of the economy, he added.
Asked whether the United States can ever offer competitive wage pricing that also allows Wal-Mart to continue selling products at low prices, Simon said wages are only one component of the input cost. Due to high transportation costs abroad and low energy costs fueled by the U.S. oil production boom at home, it makes sense to manufacture some categories in the United States, he said.
"You've got to overcome the inertia of the capital already invested in Asia, and so it will take a little time to gain traction. Some categories can come back right away. Some never will. Large products, heavy products, technology-driven products with not a lot of labor inputs are already here and coming," he said.
As for this year's holiday shopping season, Simon said the consumer generally won because pricing was very low and the deals were deep. Discounting will likely impact earnings this season, he added.