“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ― Emile Gauvreau
If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.
The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.
The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.
The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:
- There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
- There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
- U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
- The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
- Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
- For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.
The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.
The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.
The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000’s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.
The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980’s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.
To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.
This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.
Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.
With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.
The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.
The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.
The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
Why don’t Kmart Target JCpenny and all the dying retailers open Fed ex or Ups stores inside their big boxes. That way they can save on shipping by having one drop off point for the online orders.
I am truly amazed that the banksters have been able to string this Ponzi scheme into 2014. This really is the largest confidence game ever played, and it’s being done on a worldwide scale.
But the bigger the Ponzi, the harder it falls. When it falls, it’s going to be epic. What happens during and after the collapse is the $64 trillion question.
Since the tax paying diminishing working class is funding all of the government handouts, what happens when the working folks run out of money, where will the money come from to support the free shit army?
Dammit, Admin, you are scaring shit out of me. Can’t you put up some good news every so often?
You called this years ago. This is the one area where your batting average is perfect. Thanks for the info.
If I was smart and brave enough, I bet there would be a way to turn this info into a big pile of moola.
Llpoh says:
“If I was smart and brave enough,…”
But you are a ‘brave’ isn’t that the meaning of the word? What are the Atlanta Braves named after?
The solution to this problem is painfully obvious.
Build more malls. Open more stores.
I’m betting I get hundreds of calls from headhunters next week.
Retail isn’t dying it’s moving online.
WinP,
Brick/Mortor Retail is dying, and Online shopping is making the decline faster. When you fall out of the Middle Class you can only afford your basic needs and none of your wants. You can see and hear it everywhere.
Just a note on Income.
Household income is generally defined as a combined total of all those working in the household. this can be one person, two, three, four, five or more!
More people are making minimum wage at an older age and although I cannot prove it, I would guess that it has never been like that before.
So back to household income – In California I believe minimum wage just jumped up to $9.00 an hour.
Take $9 an hr. – $360 a week or $18,720 annually. Three people on minimum wage in one household make up the average household income.
My point is – there are not a lot of people out there making even $30,000 a year!
A mighty fine post. Thank you
Will it end with a bang or a whimper?
Above all else be armed.
The retail space owners are humming a different tune: “How I Learned to Stop Worrying and Love the FEMA Camps.”
(I read recently that Simon Properties had signed a deal with the DHS.)
Jackson:
I’m a good example of the New American Consumer.
I thinking of savings first and setting aside money for the future.
Providing for family – educating children and helping a couple of needy relatives – is high on my list.
Buying cheaply or used – saving money makes me feel good – I do it more and more often.
I like eating at home and family entertainment.
Creating and doing things together beats being entertained by tv or others. It’s more satisfying.
Store visits and consumer expenses, I eschew.
I like being self-reliant.
IraK
So the economy suffers. That’s unfortunate but downturns happen and America will recover. More important, don’t you think, is that the USA and her allies continue to dominate the Middle East, Europe, and East Asia. We are containing the terrorist Arab states, Russia, and China. Sure there’s a cost, but remember, WW2 got us out of the Depression. The military will come through for us again. A little sacrifice often pays big dividends. Cut back on your spending, like my friend Jackson, if necessary, and let the leaders you elected put your money to work at home and abroad where it will do the most good.
Irak never fails to deliver. He’s our very own reverse Tokyo Rose.
As I’ve said before, the food and dairy industry seems to be doing fine; there is a lot of activity going on. I suspect that families under pressure to restrain spending, are buying less shit and if they eat at home rather than at a restaurant, the same stuff gets produced anyway. Take the greek yogurt fad. Chobani started up not all that long ago and last year, they built the largest yogurt plant in the world in Idaho. It’s so big it has 12 200,000 gallon silos for raw milk and the cost is likely more than a billion (which is a helluva lot for a dairy plant). They are even talking about expanding it.
The upside of all this is there are going to be lots of discounts and sales going forward. Save your money and wait for these stores to start falling and load up.
I went to Kohls and bought winter clothing for next year for some of the Grandkids today, all of it 60- 80% off.
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Thanks for a very well-written and informative article, probably the best one on this subject I’ve read in years. And I’ve read some good articles from some knowledgable journalists on the current retail debacle. I also have to say that this article is very witty which makes it entertaining to read w/o trivializing the content. Keep up the good work, we need more talented and honest writers like you to inform the public about what we face.
You state that 6% of sales are from on-line purchases, but is that the percentage within a particular retailer’s sales only? It doesn’t seem like you’ve accounted for pure on-line retailers like Amazon, Vitacost, Zappos and the like. How much of the retailer shortfall has been made up by those firms? I agree with the general trends you’ve described, just not sure about the severity, at least yet. While my purchases overall are down, I have replaced almost all retailer buys with on-line buys. It’s dangerous out there.
tham
Only 6% of all retail sales in the entire country are done on-line. It accounts for Amazon and every other on-line retailer. The severity of the situation is worse than I’ve described.
“Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for – in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.”
Ellen Goodman
I thank you for this article. To me it explains the reverse behavior of a banking dynasty scion who in 2006 or probably earlier invested heavily in India, and is now all over China. It is China as dominant and also the superior world economy in that they tenaciously are educating their young in the American virtues that seem to be willfully abandoned in the current manifestation that calls itself a USA country. Plus the gold will back YUAN trade and it is nice of London to set that all up.
Just ready to go.
Very relaxing.
I am afraid that quite literally when the events that you see clearly, which in fact are already coming into focus, currency devalue, cyber Bandar boys relate the so-called working class, poor class and the existing wealthy here will calmly follow leaders who enjoy rather violent things.
So sad.
Plus the State exists as 40-60% percent of transfer payments as GDP, which probably everybody knows.
War, double cross, China almost ready. Russia gets to clean.
What goes around comes around…..
Russia could be a good ally or rather hard customer for the Americans in future. As media so controlled it is amazing that my hacker quarterly had the Rus Programmer down to his cell, Skype and email while the pontificates at USA media were still issuing we think it is this that.
Just check your statement. How thoughtful.
I am always watching the behavior of crowds these days. Being poor, and unemployed.
Madness of societies and all that.
I appreciate the time and effort the writer of this blog invests. I am sure it does a world of good.
I also have given up being baffled and amazed by the Americans. It is not like their haven’t been people warning, pleading, screaming a them to change their political system in order to avoid certain dark fates. Rather tiring the demanding fat assed American who almost kills the homeless lady on the way to big trough big town buffet and the assholes bless them selves as they do it. Can you imagine the febrile minds of Iraqui males orphaned and homeless due to war.
When she is most weak or the horrors but see I have no degree or endorsement by CNN or the pooper guy, in fact I don’t even have a car which is equivalent to AIDS pre 1980’s Murka, so why stay in such a evil place.
And of course it big of those idiotic shits to say they are praying for me.
I am praying for you too.
I am in agreement with the Muslim and Hopi prophets.
Time to go and help those that want me. I can watch from afar and myabe write something good.
I realize now how immature, and stupid and arrogant I have been. Screaming at a young Kim Kardashian wanna be almost plowing into me in a crosswalk or almost getting into a fight with the Obama thug who is looking to get whitey is not what I want my life to be about.
Trying to live the diversity trip as the Mexican tries to figure what he can scam ooutta me or the Mexicana lady offering herslf up as I seem to have a verifiable income so that is EBT pussy time.
Disgusting.
ANd it’s not like I am primo moral person here.
These people don’t read books, they idolize whores, criminals and murderers.
People who wan to create things, or help people, or understand and investigate are losers, wusses, and freaks. Politeness is kindness as it is despised.
Quite literally the Obey Meme is what has been implemented and I am sure the dark lords of elite enjoy the pornography of control. They enjoy the mind controlled masses as profit centers.
They want it all and unfortunatley even many good honest working people seem to just bend over and say here have at it, in fact I will pay for the lube.
Yea, the macho American; The turban head dudes give that a run for th emoney and they got antiques and slippers, and hardly any tech.
They will litrally hold up their phones to picturegram the nukes here.
Twitter this, twitter that and you got China, Russia, practically everybody cpet the duffees here ready to watch the big show.
AMERICAN HUSTLE, no lets reverse engineer that for truthful tommarrows. AMERICAN HUSTLED.
The culture reflects the soul. They got a book to make you feel better but I prefer classics these days.
Voltarie had it write. And think he watched those Versailles types get the old one two three.
Sad but true. Many in my town have only people that live in huge mansions that can’t be sold in order that others (not just robbers) that are in control think they are still here. They play this Im in Murka but it’s not so fun even for them in a declining tax base and regime with Communist circa 1930 China aspirations.
Ready for your organ donation comrade?
When A billionarie type is scared of the regime you know it is time to leave.
Empires come and go. The Americans want their destruction, in fact one only has to observe that it is way, way to far gone for it ever to come back to what I and others would call equilibrium.
I now understand the importance of spirituality or what my mother tried to impart having lived through the Depression in Canada. Ironically her family left Austria prior to WWII as they were land farmers and they say the wonderful socialism as being incompatible to their “values”.
i MUST DO THE SAME. I have already seen (I live in Southern CA) how a lot of very talented and capable people, are leaving. It is too tragic, sad and the scary shrugging of shoulders at impending realities.
Why do authors endlessly lament about the death of growth? Growth is bad. Growth destroys what’s left of the future. Growth consumes even more resources making endless piles of usless junk.
The growth paradigm is utter bullshit and always has been. The contraction many have warned about is here to stay, forever. All the low-hanging fruit is now totally consumed and gone. They’re mining SAND for god’s sake in order provide fuel for our cars!
No growth is GOOD. Slowdown, shutdown of the “economy” (an oxymoron if there ever was one) is GOOD. Stop lamenting about a failed paradigm. I’m damned glad to see things slow down, it’s way overdue.
I am talking about the Target, Neiman, various others hack. The hacker news from india had it before all others the writer a 24 year old indian girl from Delhi, she did not get credit. Then UK picked it up.
Admin – another great article. It’s scary to see what’s going on. And Sears? I couldn’t imagine not having a Sears store (remember getting their Xmas catalogue as a kid?), but I can see it’s coming. I don’t even recognize this world anymore.
I believe Social Security lulled a lot of people into not saving for retirement. If it hadn’t been introduced, perhaps more people would have saved, although the stores and Wall Street would not have benefited from this practice, as people would not have been out spending and consuming as they did. There would not have been the expansion of stores and malls.
Think happened in 2012. China I don’t think will enjoy double cross. Tested major best radar evading missile last week.
Plus that whole missile over my city area when QE forever was announced.
US bones boy didn’t seem to convincing in Iran talks as body language of Chinese Minister was pure fury. The whole big AMerican thing seemed so bad the Rothschild stooge gave him a dress down.
If I were China and holding all that debt.
I mean the poor Chinese or rather the soon to be forever Chinese.
I know that behind scenes China/RUS has agreements.
Putin like here only a front and behind scenes O made deals like he did in Palm Springs.
That is why he is there. Luckily the children here trust and it is obvious the less groowths, live poor meme is the paradigm.
Already in my town they got a “gourmet” burgar bar and these Obey Childrens just are so pleased with themselves to have a burger out.
Sad, already Mr. Googlgly Eyes the Soros prediction on Bloomberg is coming true.
At least in RUS they had the free soviet cell blocks and gardens outside Moscow. Plus those schools. I am always in horror as I watch some retail clerk who I assume went to the LASD struggle to add a simple sum. These mafias will just have slaves forever in CAli.
Plus the RUS have the WWII we starve Hitler even if we eat the mystery meat of the missing villege idiot guy. Here maybe the will do but have all the guns and not the sharpest knives in drawer. Easy to distract and easy to follow. I would assume that the calculator of certain MIC types is working overtime as we write this to sell of the assets as that will fund tommarrow in Idaho or Halliburton in UAE, which they did way back.
And as you know in these types of situations the intelligence groups turn inward to beat the populace, and survive themselves. Of course already happening to but 2014 it is too be less hidden. Of course I am not expecting mass shudder as in Germany many just played the piano louder as those trains went by the churches.
Here is not special. I know it is insulting but old time American would say that.
There seems to be some fissures in Ship Obama. So maybe the groups that shot out the Caribou cafe wherel O staffers crafted The Death Watch Datbases will provide some Moscow 90’s entrainment for us. Who knows even the death boys are getting sequestered and quartered. When they say Manchurian is incompetent I just shake my head.
He is way competent.
BlackPOS? Why was the software named after the president?
Who knew malware writers were racist?
It should have been named HalfBlack,HalfWhitePOS.
These Growth At Any Cost CEO’s need to strap on their golden parachutes and head towards the exit. Make way for evolution – everything changes and the old economy is turning into rust.
Government will be next as people begin to realize that only suckers work. More and more people will move into the Black Market Economy starving government for the tax money it must have to support the FSA and its 20 million useless workers.
The reset may turn violent as the banks may not like losing their current monopoly on the issuance of currency. Government may turn violent as well but starved for taxes, it will not be able to maintain its enforcement arm. Government may be forced to turn to the FSA in an attempt to confiscate whatever wealth remains but the freeshitters haven’t done a single thing in their entire lives and probably shouldn’t be counted on to do much of anything other than starve to death in the streets.
Good times will be had by all.
The chart I’d like to see is one of prepared/processed food sales versus raw ingredients. Do people buy more raw ingredients when times get tough or just switch to cheaper prepared foods? Here in Miami while there many be a lot of hype about growing your own food, it is rare to see a garden. And when you do see one, it is most likely in a high income neighborhood–they have a small garden because they want to, not because they need to. Even with the community gardens, the ones that struggle to stay open are in the poor neighborhoods, there’s long waiting list for the ones in the wealthier areas like Miami Beach.
I see that what I had to say has been somewhat well received, but with the comments since, I thought I should revisit it with analysis instead of humor.
Picture your local 3 anchor mall. They are dropping stores left and right. Actually, I can only conjure memories of my local one, I’ve not been there in years. When was the last time you bought a CD? And why would you want to today? Those were the first stores to go poof in the current digital age. But that’s not what I’m wanting to talk about.
Picture that building, empty. No cars in the parking lot. You have a facility that has a massive amount of space, and cleared space around it that would be relatively trivial to put a double (razor wire topped) fence around. While you don’t get grass in your exercise yard, you have instant FEMA Camps.
Simon Properties isn’t the only one (they happen to own a major mall around here). Most professional sports facilities have signed deals with DHS as well. I presume they didn’t know they were signing their facilities over to the devil when they did so. From the information I have, they did a trial run (I believe in Colorado, probably Denver) where they basically abducted children out of schools, and had actors show up to test the troops “begging for their children.” Simon Properties is a fairly minor player from what I have seen in my travels (tho they do own quite a few malls), I’m sure many of the other players in that market have done the same.
They are trying to gather all of the National Guard under the DHS. They are trying to de-humanize all of the local police forces as well. At that point none would fear turning their weapons on innocent Americans. Something is coming, and I suspect it will happen by years end.
This will not end well. Have your bug out (or in) plans in place, and get seat-belted in for the wild ride to come.
Something I wanted to add. I had been hearing about the “FEMA Camp” boogie monster for well over a decade now. At first I refused to believe. I figured these things had to be pretty damn easy to spot, and the people spouting this crazy nonsense must be, well, crazy.
(Forgive me those who have heard this before.)
While my mind tried to grapple this concept, my first thought was, the USA would put these damn things where the USA put them in the past. It lead me to visit Manzanar. I would highly recommend that anyone who has the possibility of visiting one of those WWII American concentration camps,… Do so. A recent Hawaii Five-0 episode talked about one in Hawaii, I was not aware of that one. The few that existed in the eastern US have been mostly re-developed. I believe the most eastern one that still shows traces on the earth is in Colorado, and that one is not a park, just a matter of time before it goes poof.
If you can, visit your local concentration camp. My visit to Manzanar moved me to tears (several times). If you don’t know what your country has done, then how can you stop it from happening again?
(Easy to spot from Google Earth. Figured if there were these places being built we would see them from space years ago. Seems they were using that $$$ to coerce retail space providers to be complicit in “times of emergency.”)
Mats: Which one? Monticello or Prairie Island?
This is the best article you’ve had on your website, and probably the most important.
CEO Jamie Dimon has presided over the largest financial crime spree in world history. . . . It depends on how you count it, but it is more than a dozen, and more in the range of 15 major felonies that either the United States investigators have found, state investigators have found or foreign governments have found…JP Morgan’s frauds are epic in scale, unprecedented in world history…
The system is ungovernable… It has already largely imploded.”
William K. Black
Baby Boomers Retiring My Fat Ass. Storyline Obliterated.
Some retailers that seem to be doing well:
Gun Shops
Prescription Drug Stores
Liquor Stores
Most of the shuttered buildings will be a total loss. You can’t leave a building idle for a decade or two without maintenance.
Regarding food stamps, I’m astounded that SNAP recipients aren’t required to be concurrently enrolled in a gardening or home canning class of some sort. There are a lot of free classes of this type. Also, gardeners tend to passionate about their hobby, and many would volunteer without significant compensation.
Drive around any neighborhood, especially relatively new ones without a lot of tall trees, where it is easier to see into back yards. How many people have vegetable gardens? Low single digit percent, unfortunately.
Due to the strong farm lobby, it is reasonable to expect that SNAP will continue. However, I doubt that the payments will keep up with food price inflation. Even Social Security payments, which are designed by law to index inflation (COLA) lag, due the government’s habit of lowballing consumer price levels with substitutions, seasonal adjustments, and hedonic massaging. Food stamps will lag even more, I’m guessing.
While I agree with the thrust of this article, the lack of retail visits is not a very accurate way to judge consumer spending. Many people now shop the internet rather than brave the holiday season madness in brick and mortar stores, myself included.
Lord Koos
Please read for comprehension. On-line sales account for ONLY 6% of total retail sales in the country. Can you understand math?
That means that 94% of the $4.4 trillion in retail sales is done by bricks and mortar stores. There are 1 million of them occupying 15 billion square feet.
“Some retailers that seem to be doing well:
Gun Shops
Prescription Drug Stores
Liquor Stores” – 6000 Feet
Add one more “retailer” to your list: Pawn Shops.
It’s the Matrix where the socialist superstate does everything for everyone to the point that no one ever needs to get out of bed.
Just so you know, University of Phoenix isn’t all hype with no product. I’m in a Master’s program through UoP and I have to go to class every week – no on line for my program. I also have hundreds of hours of clinical time both completed and still to complete. And the price isn’t that much more per credit hour than my state universities for the same program, and the flexibility in scheduling work is definitely better. I choose my clinical days, not the program.
Yes, I will be over $100,000 in debt by the time I am done, but that includes my associate’s, bachelor’s. and master’s degrees. And I, unlike whoever you’re speaking of derisively in your post, will have a job when I get done. Whether I will make enough to ever pay off my loans is up for discussion though…
However. I’m making less an hour than I did 1 year out of school with my associate’s degree. I still have no health insurance. Even with Obamacare subsidies our OOP cost is $590 and the deductible is $12,700 for the two of us. Not buying that crap. The ironic thing? I work in health care.
People at my workplace are cancelling their insurance right and left. They’re finding they just can’t afford it. More and more people are just saying that they’ll pay the fine and take their chances. And these are the young, healthy people. The ones Obamacare depends on.
The University of Phoenix is a scam built upon Federal student loans. Less than half the people who enroll graduate, but Apollo keeps the tuition. The dupes keep the debt.
Going $100k in debt for a University of Phoenix degree is about the dumbest fucking thing I’ve ever heard. Anyone dumb enough to do such a thing is virtually unemployable.
When I see a resume with University of Phoenix on it, I dump it in the trash.
I don’t have $100K in debt to the UoP. And I won’t when I’m done either. If you had read my comment, that was TOTAL debt. Ironically, the greatest debt I had prior to this was my student loan debt from the University of AZ for their microbiology and immunology program. Which I had to drop out of when my former spouse disappeared.
Online only programs they have? Utter crap. The nursing programs? Actually pretty good. At least here in AZ. They, unlike many of the UoP programs, actually graduate a goodly percentage of those who enroll, and I can tell you that my learning experience is equal to my friend’s who is enrolled in NAU. You are not running a business in health care I would guess, but you can think what you like.
The program that is crap is Grand Canyon University’s. Those resumes you should be throwing in the trash. Including their nursing program graduates. They have resorted to paying preceptors to take their students on, because it is so bad. Degree mill. I should know, I went there for my bachelor’s. Good thing I’m a motivated learner, because I learned pretty much nothing from them. Except how to write a paper in APA format.
Here’s the best of all. A great many retail properties of all types were financed by Wall Street in 2004 – 2007 for 20% down. Under the CMBS programs, the loans were bundled and syndicated to investors. Approximately 90% of these loan were for a 10-year term and cannot be extended due to CMBS regs. The properties now have plenty of empty stores and will not able to get refinancing upon loan maturity, unless the owner pumps in a great deal of money which he is not going to do. Maturity defaults will abound in the coming years, leading to “lender” owned real estate, which will drive down retail property prices even further. Why doesn’t anyone care?
Nice article, as usual, hard to dispute (I wish I could). Yesterday the wifey and I were walking on Montana ave. in Santa Monica, CA. This is an affluent area. Houses just north of it go for no less than 2 mil. We saw 12 empty retail spaces in about 6 small blocks. There are also empty spaces on Wilshire, and the promenade a few blocks away, also nice areas. The evidence of recovery is noticeable everywhere. Most of the businesses were some sort of clothing store, if I remember correctly. There are still a bunch left, at least 15. While we walked, we noticed there was hardly anyone in most stores except nail salons…gotta good…like, like OMG. Damn.
The solution is already being discussed…every credit card or debit card should have a radio frequency identification chip (RFID) within it like the newer passports and driver’s licenses thanks to the 2014 implementation of the REAL I.D. ACT of 2005 that gets fully underway in over 20 states this year alone!
Keep an eye on the current immigration bill being discussed…it has a provision in it that some warn would create a national biometric i.d. card system….(no worries of abuse with this probability, right?)
It could never get like Aaron Russo suggested in his documentary “Freedom to Fascism”? With Obamacare and the push for medical records to go completely “online” like industry leader Kaiser has done for years should have alarm bells going off in most of our heads…
[img]http://www.youtube.com/watch?v=6OhlQGaUduw[/img]
Here’s an excerpt from an article about the chipped cards.
Target breach ‘watershed event’ for security
Natalie DiBlasio, USA TODAY
Even as public pressure mounts for a more thief-proof system, it looks like the USA will remain behind the curve in credit card security until at least October 2015, credit card security analysts say.
That’s the target date Visa, MasterCard, American Express and Discover set for complete the transition from insecure magnetic strip cards to secure chip cards and chip readers.
The cards, called EMV for Europay, MasterCard and Visa, have encrypted chips that are almost impossible for criminals to duplicate.
….
The card with the chip is still more expensive, but it’s moving closer to the cost of the magnetic strip, says Doug Johnson, who oversees risk management policy for the American Bankers Association.
Banks have started giving out chipped cards, and retailers are starting to figure out their strategy to switch over to the technology. If retailers opt not to switch their devices, they will be liable for any fraud, Johnson says.
http://www.usatoday.com/story/money/business/2014/01/10/target-security-emv/4406861/
http://www.youtube.com/watch?v=6OhlQGaUduw
Susan, you have my best wishes.
I own two franchise retail stores that have over the last 7 yrs have had record breaking sales. 2012 was my best % as my sales were up almost 20% yoy, now before you think I believe everything is coming up roses, I am surrounded by vacant real estate to my left and right. 20k sq ft on one side 2k on the other around the corner are more vacancies. When all this starting happening yrs ago I thought “Oh God, here we go…” I was positive it was going to impact me, how could it not? To my complete and utter shock we not only survived we have thrived. My other location is in the same situation, anchor store closing, shops all around me going under and we surged. I’m as suprised as anyone else. Our prices are very competitve and in many cases cheaper or as cheap as internet prices. We do a lot of volume and I wheel and deal on a daily basis, my margins have taken a hit but volume has so far made up for it. I am very aware of what is going on (I read this blog don’t I?) right now I’m just riding it until the music stops.
Maybe I’ll be heading for the dustbin of retail history too, the company is well known and established 75 yrs ago, we’re publicly traded (I can’t say) and I’d like to think we have a good reputation. I agree with most everything that has been said up above I’m hoping that we can survive the carnage that is coming. Nobody wins in a depression, just those who lose the least.
It’s a well documented article but what it assumes is that all b2c shopping is made in-store. The reality is that e-commerce is growing tremendously, now representing about 5% of all retail sales, and this explains the lack of new store openings and store closures. What is real, though, is that the jobs in retail are not ever going to come back, and the question of what humanity will be left doing is a big question mark. We’re entering a new era.
Admin,
Great article, I really love your retail analysis. If you ever give up your college gig you would certainly be highly sought after for your retail insight. Having worked retail for a number of years, the ones I see surviving are the ones closest to their customers. The over built cookie cutter box stores have doomed themselves with their formulaic, debt driven, retail ponzi scheme. There will be room for stores that can keep competitive and keep in touch with their customers needs. Retail is never easy, it was never meant to be, but these buffoon CEOs felt they could continue to puke out stores at an astonishing rate and it would have little or no effect on existing store sales. Idiots.
Bob.
Boston Bob
When I was at IKEA the CEO idiot wanted three stores in Boston – Sommerville, Stoughton, and another to the west.
I ran the numbers, demographics and costs. It couldn’t work. I told them so. I got fired.
They still only have Stoughton, 10 years after I left.
Admin,
I live in the town next to Stoughton, though I have never been to IKEA. I remember there being some political battle over the store in Somerville, someone must not have received their payoff. It would have never worked with two huge stores about 35 minutes apart. Boston metro area is not very large as you well know. It is funny how some CEOs can stand hearing the truth. I often wonder how the conversation goes when the lackeys are telling Jamie Dimon, “Hey boss this might be illegal.”
Bob.