Dollar Tree and Dollar General's recent earnings reports highlight the increasing financial strain on low-income consumers. Dollar Tree's same-store sales grew by just 1.3%, while Dollar General saw a mere 0.5% rise, reflecting weaker-than-expected performance. Both companies attribute this to inflationary pressures, with low-income households cutting back on essential purchases due to rising costs for rent, utilities, and healthcare. 

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Many of Dollar General’s core customers have maxed out their credit cards or anticipate missing bill payments, signaling heightened financial insecurity and a broader economic strain on lower-income segments. 

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This is crucial for the overall economy, as lower-income consumers have the highest marginal propensity to consume, meaning they contribute significantly to overall consumption. Without a financially stable lower-income class, the entire economy faces increased risk.

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Big Lots Files for Bankruptcy Amid Economic Challenges

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Big Lots has filed for bankruptcy, citing high inflation, rising interest rates, and shifting customer behavior as key factors. Nexus Capital Management is set to acquire most of the retailer's stores and operations, allowing locations and the website to remain open during the Chapter 11 process. The company plans to close around 300 of its 1,400 stores and has secured $707.5 million in financing to continue operations while seeking financial stability. More store closures could follow as Big Lots works to optimize its business.

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