The definition of death rattle is a sound often produced by someone who is near death when fluids such as saliva and bronchial secretions accumulate in the throat and upper chest. The person can’t swallow and emits a deepening wheezing sound as they gasp for breath. This can go on for two or three days before death relieves them of their misery. The American retail industry is emitting an unmistakable wheezing sound as a long slow painful death approaches.
It was exactly four months ago when I wrote THE RETAIL DEATH RATTLE. Here are a few terse anecdotes from that article:
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 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.
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.
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.
Retail store results for the 1st quarter of 2014 have been rolling in over the last week. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:
Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%
Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%
Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%
JC Penney Thrilled With Loss of Only $358 Million For the Quarter
Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%
Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%
Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores
Gap Income Drops 22% as Same Store Sales Fall
Ann Taylor Profit Crashes by 75% as Same Store Sales Fall
American Eagle Profits Tumble 86%, Will Close 150 Stores
Aeropostale Losses $77 Million as Sales Collapse by 12%
Big Lots Profit Tumbles by 90% as Sales Flat & Exiting Canadian Market
Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%
Macy’s Profit Flat as Comparable Store Sales decline by 1.4%
Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%
Urban Outfitters Earnings Collapse by 20% as Sales Stagnate
McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%
Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster
TJX Misses Earnings Expectations as Sales & Earnings Flat
Dick’s Misses Earnings Expectations as Golf Store Sales Plummet
Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%
Lowes Misses Earnings Expectations as Customer Traffic was Flat
Of course, those headlines were never reported. I went to each earnings report and gathered the info that should have been reported by the CNBC bimbos and hacks. Anything you heard surely had a Wall Street spin attached, like the standard BETTER THAN EXPECTED. I love that one. At the start of the quarter the Wall Street shysters post earnings expectations. As the quarter progresses, the company whispers the bad news to Wall Street and the earnings expectations are lowered. Then the company beats the lowered earnings expectation by a penny and the Wall Street scum hail it as a great achievement. The muppets must be sacrificed to sustain the Wall Street bonus pool. Wall Street investment bank geniuses rated JC Penney a buy from $85 per share in 2007 all the way down to $5 a share in 2013. No more needs to be said about Wall Street “analysis”.
It seems even the lowered expectation scam hasn’t worked this time. U.S. retailer profits have missed lowered expectations by the most in 13 years. They generally “beat” expectations by 3% when the game is being played properly. They’ve missed expectations in the 1st quarter by 3.2%, the worst miss since the fourth quarter of 2000. If my memory serves me right, I believe the economy entered recession shortly thereafter. The brilliant Ivy League trained Wall Street MBAs, earning high six digit salaries on Wall Street, predicted a 13% increase in retailer profits for the first quarter. A monkey with a magic 8 ball could do a better job than these Wall Street big swinging dicks.
The highly compensated flunkies who sit in the corner CEO office of the mega-retail chains trotted out the usual drivel about cold and snowy winter weather and looking forward to tremendous success over the remainder of the year. How do these excuse machine CEO’s explain the success of many high end retailers during the first quarter? Doesn’t weather impact stores that cater to the .01%? The continued unrelenting decline in profits of retailers, dependent upon the working class, couldn’t have anything to do with this chart? It seems only the oligarchs have made much progress over the last four decades.
Retail CEO gurus all think they have a master plan to revive sales. I’ll let you in on a secret. They don’t really have a plan. They have no idea why they experienced tremendous success from 2000 through 2007, and why their businesses have not revived since the 2008 financial collapse. Retail CEOs are not the sharpest tools in the shed. They were born on third base and thought they hit a triple. Now they are stranded there, with no hope of getting home. They should be figuring out how to position themselves for the multi-year contraction in sales, but their egos and hubris will keep them from taking the actions necessary to keep their companies afloat in the next decade. Bankruptcy awaits. The front line workers will be shit canned and the CEO will get a golden parachute. It’s the American way.
The secret to retail success before 2007 was: create or copy a successful concept; get Wall Street financing and go public ASAP; source all your inventory from Far East slave labor factories; hire thousands of minimum wage level workers to process transactions; build hundreds of new stores every year to cover up the fact the existing stores had deteriorating performance; convince millions of gullible dupes to buy cheap Chinese shit they didn’t need with money they didn’t have; and pretend this didn’t solely rely upon cheap easy debt pumped into the veins of American consumers by the Federal Reserve and their Wall Street bank owners. The financial crisis in 2008 revealed everyone was swimming naked, when the tide of easy credit subsided.
The pundits, politicians and delusional retail CEOs continue to await the revival of retail sales as if reality doesn’t exist. The 1 million retail stores, 109,000 shopping centers, and nearly 15 billion square feet of retail space for an aging, increasingly impoverished, and savings poor populace might be a tad too much and will require a slight downsizing – say 3 or 4 billion square feet. Considering the debt fueled frenzy from 2000 through 2008 added 2.7 billion square feet to our suburban sprawl concrete landscape, a divestiture of that foolish investment will be the floor. If you think there are a lot of SPACE AVAILABLE signs dotting the countryside, you ain’t seen nothing yet. The mega-chains have already halted all expansion. That was the first step. The weaker players like Radio Shack, Sears, Family Dollar, Coldwater Creek, Staples, Barnes & Noble, Blockbuster and dozens of others are already closing stores by the hundreds. Thousands more will follow.
This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers. The open and shut case for further shuttering of 3 to 4 billion square feet of retail is as follows:
- There is 47 square feet of retail space per person in America. This is 8 times as much as any other country on earth. This is up from 38 square feet in 2005; 30 square feet in 2000; 19 square feet in 1990; and 4 square feet in 1960. If we just revert to 2005 levels, 3 billion square feet would need to go dark. Does that sound outrageous?
- Annual consumer expenditures by those over 65 years old drop by 40% from their highest spending years from 45 to 54 years old. The number of Americans turning 65 will increase by 10,000 per day for the next 16 years. There were 35 million Americans over 65 in 2000, accounting for 12% of the total population. By 2030 there will be 70 million Americans over 65, accounting for 20% of the total population. Do you think that bodes well for retailers?
- Half of Americans between the ages of 50 and 64 have no retirement savings. The other half has accumulated $52,000 or less. It seems the debt financed consumer product orgy of the last two decades has left most people nearly penniless. More than 50% of workers aged 25 to 44 report they have less than $10,000 of total savings.
- The lack of retirement and general savings is reflected in the historically low personal savings rate of a miniscule 3.8%. Before the materialistic frenzy of the last couple decades, rational Americans used to save 10% or more of their personal income. With virtually no savings as they approach their retirement years and an already extremely low savings rate, do retail CEOs really see a spending revival on the horizon?
- If you thought the savings rate was so low because consumers are flush with cash and so optimistic about their job prospects they are unconcerned about the need to save for a rainy day, you would be wrong. It has been raining for the last 14 years. Real median household income is 7.5% lower today than it was in 2001. Retailers added 2.7 billion square feet of retail space as real household income fell. Sounds rational.
- This decline in household income may have something to do with the labor participation rate plummeting to the lowest level since 1978. There are 247.4 million working age Americans and only 145.7 million of them employed (19 million part-time; 9 million self-employed; 20 million employed by the government). There are 92 million Americans, who according to the government have willingly left the workforce, up by 13.3 million since 2007 when over 146 million Americans were employed. You’d have to be a brainless twit to believe the unemployment rate is really 6.3% today. Retail sales would be booming if the unemployment rate was really that low.
- With a 16.5% increase in working age Americans since 2000 and only a 6.5% increase in employed Americans, along with declining real household income, an inquisitive person might wonder how retail sales were able to grow from $3.3 trillion in 2000 to $5.1 trillion in 2013 – a 55% increase. You need to look no further than your friendly Too Big To Trust Wall Street banks for the answer. In the olden days of the 1970s and early 1980s Americans put 10% to 20% down to buy a house and then systematically built up equity by making their monthly payments. The Ivy League financial engineers created “exotic” (toxic) mortgage products requiring no money down, no principal payments, and no proof you could make a payment, in their control fraud scheme to fleece the American sheeple. Their propaganda machine convinced millions more to use their homes as an ATM, because home prices never drop. Just ask Ben Bernanke. Even after the Bernanke/Blackrock fake housing recovery (actual mortgage originations now at 1978 levels) household real estate percent equity is barely above 50%, well below the 70% levels before the Wall Street induced debt debacle. With the housing market about to head south again, the home equity ATM will have an Out of Order sign on it.
- We hear the endless drivel from disingenuous Keynesian nitwits about government and consumer austerity being the cause of our stagnating economy. My definition of austerity would be an actual reduction in spending and debt accumulation. It seems during this time of austerity total credit market debt has RISEN from $53.5 trillion in 2009 to $59 trillion today. Not exactly austere, as the Federal government adds $2.2 billion PER DAY to the national debt, saddling future generations with the bill for our inability to confront reality. The American consumer has not retrenched, as the CNBC bimbos and bozos would have you believe. Consumer credit reached an all-time high of $3.14 trillion in March, up from $2.52 trillion in 2010. That doesn’t sound too austere to me. Of course, this increase is solely due to Obamanomics and Bernanke’s $3 trillion gift to his Wall Street owners. The doling out of $645 billion to subprime college “students” and subprime auto “buyers” since 2010 accounts for more than 100% of the increase. The losses on these asinine loans will be epic. Credit card debt has actually fallen as people realize it is their last lifeline. They are using credit cards to pay income taxes, real estate taxes, higher energy costs, higher food costs, and the other necessities of life.
The entire engineered “recovery” since 2009 has been nothing but a Federal Reserve/U.S. Treasury conceived, debt manufactured scam. These highly educated lackeys for the establishment have been tasked with keeping the U.S. Titanic afloat until the oligarchs can safely depart on the lifeboats with all the ship’s jewels safely stowed in their pockets. There has been no housing recovery. There has been no jobs recovery. There has been no auto sales recovery. Giving a vehicle to someone with a 580 credit score with a 0% seven year loan is not a sale. It’s a repossession in waiting. The government supplied student loans are going to functional illiterates who are majoring in texting, facebooking and twittering. Do you think these indebted University of Phoenix dropouts living in their parents’ basements are going to spur a housing and retail sales recovery? This Keynesian “solution” was designed to produce the appearance of recovery, convince the masses to resume their debt based consumption, and add more treasure into the vaults of the Wall Street banks.
The master plan has failed miserably in reviving the economy. Savings, capital investment, and debt reduction are the necessary ingredients for a sustained healthy economic system. Debt based personal consumption of cheap foreign produced baubles & gadgets, $1 trillion government deficits to sustain the warfare/welfare state, along with a corrupt political and rigged financial system are the explosive concoction which will blow our economic system sky high. Facts can be ignored. Media propaganda can convince the willfully ignorant to remain so. The Federal Reserve can buy every Treasury bond issued to fund an out of control government. But eventually reality will shatter the delusions of millions as the debt based Ponzi scheme will run out of dupes and collapse in a flaming heap.
The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since I always look for a silver lining in a black cloud, I predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.
Why oh why can’t I get my husband on board with these realities………It’s a constant battle. Thank God for your articles that I read it and print it out, placing them squarely in the center of my husband’s desk so he can’t ignore them. Even so he believes the Wall Street, msm hype. Geeeez……………if it weren’t for you I’d think women had gotten ALL the brains. Anyway…THANKS for your hard work.
“SSS probably has a big, fat government pension every month. He can afford to golf and live the good life.”
—-AWD
Nope. Pension is modest by any standard, not big and fat.
Secret? No debt. None. House and cars paid for. House in Virginia paid off early on a 15-year mortgage, the sale of which was enough to pay cash for a new house in Arizona. No credit card interest payments, ever. If we couldn’t afford it, we didn’t buy it. Smart, safe investments resulting in big, fat 401(k)s. Heh. Fancy cars? Never, and we drive them an average of 12 years or more. Savings? Every penny we could, most of which went into the 401(k)s.
How about golf while I was working for 44 years? About 6 times a year and always at the much cheaper municipal courses where fees were about $20-25 a round. I bought exactly one set of clubs in those 44 years.
Never joined a club until I retired. Now it’s about 8 rounds a MONTH on a gorgeous Jack Nicklaus-designed golf course, complete with a fancy men’s locker room, a private locker, and very nice clubhouse with good food and great service. I worked for it, I saved for it, and I’m damn well gonna enjoy it.
You don’t have to apologize super sleuth, I made a cheap shot. I used to like to play golf, but I have a bad knee and can no longer. Did you ever play the course at the Air Force Academy?
AWD
Yes, I played the Eisenhower course several times. Brutally long and difficult from the back tees. Barely broke 100 first time I played it.
Things look bad in the US but they are not so bad in the UK. Y/Y April saw an improvement in UK retail sales of 6.9%. Non food retail was 6.3% up. The stores have been busy and unemployment is falling with reasonably honest stats. Inflation is about 1.7%. Yes it is fiddled and fixed but not quite so badly as in the USA..
Just a shame we share the same financial system
Peak Stuff.
We’re on the downslope of the bell curve. America is awash in 30 years of stuff. It just makes sense that the stuff market has reached saturation and is on decline.
Perhaps retailers never foresaw that people could have enough stuff. Nobody has ever calculated what happens when there is enough stuff, and even more. We got there first.
I just came back from a long weekend in Chicago, seeing transplanted young relatives there. I was utterly blown away. Not only is the joint booming, it’s booming the way it hasn’t since before the Depression. It simply glitters, and there is NO crime in the Loop/Magnificent Mile area.
I should explain my confusion. I used to head an older chemicals firm on the East coast, with a West coast division that had been started in the late 30’s, with a location in the Tribune Tower. In the early 80’s we relocated to Itasca, after too many girls got mugged going out of the building after work; the Loop had become a predatory environment. I merged the firm with another in the late 90’s, and my last trip to Chicago had been in the fall of ’98; prior to that, I’d been going there on a quarterly basis.
The Chicago I had known had been a dirty, dying city, much like Philadelphia. The one I saw this weekend was the antithesis of that, and no minorities were in view at all, which is distinctly different from my memories of Chicago. My brother in law summed it up thus: in effect. most of Wall Street moved West. That’s certainly borne out by my nephews, who trade t-bills there. One of them is a partner at a firm at the Chicago Board of Trade. Now, I have considered myself a reasonably savvy and informed businessperson for most of my life; even though I no longer pursue those interests, I still follow them, and commerce in general, via the WSJ and the web. Maybe I was out to lunch the day Wall street moved to Chicago. Anyway, it appears to be one more point, in addition to the DC area where I now live and work, that appears to be immune to the general deterioration.
The funding, of course, is all sourced from the same conduit, i.e., the Fed, in terms of both NYC and Chicago. I had been far more familiar with NYC’s renaissance, as I lived and worked within
shouting distance of WTC I and II. Fortunately, I had decided to move to the country before all hell broke loose; in many respects, I wish I were still there…One of my kids still is in one of the nicest parts of Bucks County.
Eleven months since I last saw the inside of a walmart.
Boom.
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<puckles
What a long line of spackel, puckles
Bruce Erickson, thanks for the info.
All of us are trying to avoid the runaway debt train heading straight for us. My students will have to clean up this mess I & the generations before me have made, if there’s a country left. Reality is smacking everyone upside the head, so the more info the better to help us all plan.
&, even though I razz people here sometimes, I wish all of U commenters (& admin) well. Even Stucky & AWD.
Except “bb”. Fuck him.
The size of the bank bailout was $29 trillion, in 2011. Add in all the QE since then & who knows?
Also, the too big too fail banks owe a derivatives total of about, I think, $75 quadrillion. 5x global GDP for 1 year, when times were good. The US has unfunded liabilities of $200 trillion, conservatively.
All this talk about how bad the USA debt is is too optimistic. It is worse than Admin or any of us actually think it is.
http://www.cnbc.com/id/45674390
It is just a matter of time before a ‘right wing’ party in America pops up in the same vein as golden dawn in Greece, National Front in France and UKIP in England. It will be a party that stands for economic justic and unite in holding the banking system responsible for its fraudulent actions and restore prosperity to local state banks through reinsitution of regulatory agencies, etc. But I wonder, is there such a party in America yet?
Retail Death Rattle Grows Louder now UP on the Diner Blog!
Hey Jimmy Boy, I’m catching up now! Diner is 144K on Alexa in the FSoA!!. 🙂
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Finnegan RE 😉
The Retail industry has – at least – one good excuse: the bad weather. But that doesn’t explain why e.g. sales of Target has been dismal since the 1st quarter of 2013.
Thank you Admin, simple, and mostly understood. Phenomenal job as always, with me late to the party again.
It seems there is still a percentage that truly enjoys their mushroom feed. Those stores ALL have an internet presence, it isn’t enough. Those figures ALL are under-reporting year-over-year inflation in inventory and freight (and insurance), which is substantial. And the FACT that the number of employed ‘murkins has barely budged while the square footage of retail has exploded means time is up. No matter what the WSJ, MSM or DC and city hall tells you.
@AWD, surely you fucking jest about Detroit. The good taxpayers of Michigan are kicking in about $200 million (to save pensions and the museum), the regional water/sewer authority – which has been under Detroit control (and federal oversight) – is getting permission to charge the burbs directly to “backfill” the pensions for THEM. We are paying relatives of Mayor’s, for life, and now get to pay again. The “dramatic and hurtful” cuts suggested thus far are nothing. Less than 5% cut of pay. All Detroit is doing is kicking the can AGAIN, allowing whitely to make billions (obviously, why else would JP Morgan “invest” $100 million), stripping another strata of small business out of existence as only the private bond holders and small businesses will be forced to pay for the unions, politicians and banksters. Their fucking pensions are still there, the “promises” are going to be kept as more and more taxpayers/producers are bled to pay for it. Dozens of businesses have shut down this year in my town. For now it is the little guys, but it won’t be much longer before it is the big ones too.
@Llpoh, your optimism is refreshing. Truly.
@WG (I think, I’m not scrolling back up to recheck your initials, sorry), I could have written your comment about hub. I gave up with the article stuff a couple years ago. It’s called “cognitive dissonance” and there were millions of Jews that couldn’t overcome it. All you can do is find a way to build a plan b without his help. It’s tough, but can be done, hugs.
To AWD:
“Obama and the liberal progressive democrats are going to run the socialism game to the very end of the line, unless they are stopped. ”
Thats exactly right, but you will have an impossible time convincing your average friends and family of that fact and god forbid they have to actually take a stand and declare themselves on one side or another in the coming battles. Those same beleaguered friends and family (at least most of them) are fully invested in the toxic “vision” of life as it supposedly can and should be as dispensed by the Lie Stream Media and by the mass media Infotainment machine.
No one wants to consider the unpleasant thought that their professed “saviors” in the political arena or in business are nothing more than indentured servants of the heavy-handed, utterly self-serving Ruling Class, and as such their allegiances are decidedly skewed towards the Ruling Class. If anyone is foolish enough to believe that, once the center cannot hold and the economic beast slouching towards the American Bethlehem arrives their public saviors will look out for them, they are in for a most unpleasant Stalinesque awakening.
A local grocery store chain is selling off their stores and moving out of my market. The media reported it as the parent co. focusing on other markets, not failure in this market. Now the decent stores are going to be gobbled up by other local chains (reducing competition) while several poor locations will be shuttered.
Another big retailer is town is hemorrhaging as everyone already has a flat screen TV these days and there are no new “gotta have it” tech gadgets. It’s been years since I darkened their doorstep since I don’t worship the altar of video games and iJunk.
From my office I can see an ivory tower for another retailer that just sent a CEO packing with millions for failure. Their false belief that everyone loves their “brand” is costing them north of the border, not to mention other recent high profile fuck ups. Since there is no more “local” retailers they do get some of my $$ when I need to buy commodities like shit paper but they really are no different than the retail shills from Arkansas slinging the same Chinese junk.
Meanwhile my regional mall is in full on expansion mode. Macy’s just expanded and Nordstrom is moving in for the 1% crowd. Other tenant spaces inside are opening with more high end merchants. The Costco parking lot is ever full with foreign made luxury cars and people buying bulk luxury items. Nearby restaurants with $$$$ next to the price in the reviews are always full and the BMW dealership is so large it looks like a corporate HQ. What I see is truly a tale of two cities.
At the holiday BBQ what do people complain about? Not the 0.01% or the 0.1% but the 1% that they see on a daily basis…and who don’t have personal security detail. When the revolution happens I pity the fools that use credit to show an illusion of wealth. They will be the first to fall under the mob.
When i saw company’s leaving the USA after NAFTA was signed i figured it wouldn’t end well.
I am wondering about cheap commercial buildings and if getting the zoning changed so they could be a residence would be hard? Or a dual use of the building.
I missed the train again. My Dad always said that I would be late for my own funeral. Never the less, I don’t know what to say. I read the piece and comments. I’m dumb founded.
Admin.—Say what you mean! Don’t whitewash it. Give it to us straight. Alas, you’ve given it to us good and hard. This has to be the best column you have ever written!!! Notice the three exclamation points.
I can see the hand writing on the wall, in massive cursive, “AMERICA, YOU’RE FUCKED”!!! As the great and handsome Mogambo Guru says, “… we’re DOOMED!!!” Head for the lifeboats! The only trouble is, the lifeboats are all full. They’re all full of the financial elite, sold out congressional leaders, fat bankers and multi national corporation types, all with their big bonuses and big pay. The sign says, “NO ROOM FOR YOU IN THIS BOAT, SUCKERS”.
Your life is about to change in a most unpleasant way.
The only good thing about all of this is, I can finally go to Home Depot and actually talk to a sales person.
A—As Paul Craig Roberts said, “People are going to walk into Walmart and think they walked into Neiman Marcus.”
I think it was Doug Casey that said, “The government thinks of you as a milk cow, when times are tough, the government thinks of you as a beef cow!” It’s getting tough out there.
“Life is tough, but it’s a lot tougher when you’re stupid”.–Sgt. John Striker, USMC Wake up America, Smell the coffee, at $ 12 a pound.
I am going to hijack this thread a bit, and bleat about one of my favorite things – that people are misunderstanding what is happening re manufacturing.
What I keep saying is that manufacturing jobs are being more impacted by the every increasing efficiency of manufacturing than it is by “globalization”. The real issue is that the manufacturing jobs being lost to productivity are generally reasonably well paying jobs, and jobs being created are generally low-paying crappy service jobs (there are still high paying tech jobs being created, but people, you know, have to have skills and education for those).
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Notice that those are REAL gains in output per employee. Note that the increase in recent years has been phenomenal. These rapid increases in productivity have dramatically increased competitive pressure. Also, even with these gains, the need to compete against low cost countries remains. Even if a company can build products with zero labor, it may still be uncompetitive, owing to the cost of capital vs the extreme low cost of labor elsewhere.
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In the last chart, please look at how Germany has done – the country that has been held up as the model of what the US could be if it had acted better. Since 1990 Germany’s total output has hardly moved, while the US output has almost doubled.
Manufacturing is going the way of agriculture – eventually it will be fully automated. There will be no jobs in manufacturing. Whether goods are imported from China or not, there will be no jobs in manufacturing. The timing is the only issue.
So, where will new jobs come from? Admin has clearly shown it will not be in retail.
The US has let its education system rot to the point that very few people have high-level skills. Many, if not most, colleges grads are either unskilled or have gained their degrees in fields that are not commercially marketable (think Black or Womens’ Studies). The government has throttled small business of all kinds to the point that it is nearly impossible to navigate the red-tape, the start-up costs, etc., and to also possess the breadth of knowledge in labor law, EPA issues, etc. The banksters have exploited the middle class at every turn, and the debt of the country is insurmountable.
In short, the US is doomed. But with every crisis comes opportunity. Those that are prepared can take advantage of the opportunities that a crisis brings. Teach your children well, my friends.
douche bag says: “Won’t you tell me… where have all the good jobs gone? where have all the good jobs gone… ”
“Where have all the good jobs gone? Where have all the good jobs gone? Gone to China every one…Oh, when will they ever learn, oh when will they ever learn…”
Sold out by Bill Clinton, et al. But… anyone that can make $100,000 dollars in pork bellies in 3 days is smarter than me.
Is it just me or does everyone else feel like everything/everywhere (inc China) is on the very brink of TOTAL meltdown and WW3 is so damn close I can taste it ?
Armstrong says it’ll drag on for years in line with his models, past 2020, but jeezus , the way it is now how can it POSSIBLY !?
Banker suicides ? I see a lot of poor sods who’ve lost everything doing likewise, just like lemmings .
The next global plague – mass suicides.
llpoh—Nice graphs…but I don’t have no trouble seeing. James Dines wrote eons ago about the ‘age of no jobs’ much of it because of robotics. Watch this and worry about your job, cuz it’s next.
Maybe we can all get jobs making robots. But…what if they start using robots to make robots? What then?
The Matrix? Take the red pill and go back to bed.
llpoh nice note. It has relevance. Technology is resource dependent. We are peaking resource wise. James Howard Kunstler has written about resource depletion and its subsequent impact.
Things that can be, will be–things that can’t be, won’t be! The way things are now can’t be. God help us.
Homer – lmao – that is funny shit re “no trouble seeing”. If I knew how to shrink those fuckers I would.
I entered manufacturing when real production per employee was around $40k per year – it is now $160k per year. People scream about China – China has shifted the end forward a few years, for sure – but the reality is that mfg employment is and was fucked no matter what. Seriously, I can now make 4 times as many widgets per person as I could in 1980.
I specialize in products that are low volume and highly engineered. As a result, I have been able to fend off competition from automated companies, be they Chinese or otherwise. But slowly automation is getting me. The high volume automated folks have chewed through all the low hanging fruit – the high volume, repetitive work. They are now starting to focus on lower volume items. And that is my field. And at my age, I am not really interested in investing heavily – ie pulling my money out of my pocket to buy robotics and such – in an industry where margins are dropping every day. My company will carry on until it cannot.
ZombieDawg WW3 is being fought right now. It is a financial war, a cyber war with small live fire hot spots in Iraq, Libya, Iran, Syria and with Russia and China.
As for a shooting WW, forget it. God won’t allow it as it has been said. See the remarkable story of Howard Storm. a professor of art. I like Dr Daryl Schoon’s telling.
http://www.youtube.com/watch?v=VsyWGPoMiMI
Man got us into this mess. Ya think man will get us out of this mess? “We cannot solve our problems with the same thinking we used when we created them.”–Albert Einstein
This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers.
That’s why your original articles frickin rock admin 🙂
“Man got us into this mess. Ya think man will get us out of this mess?”
Realistically, no-one else or nothing else is going to…
“When prophecy fails” [good name for a book there 😉 ] mankind has to fix it or crash and burn, and no doubt the crash and burn will be the precursor to fixing it, as history so often shows.
But let’s all come back in 50 years and do it all again eh…’cos we’re too stupid a species to do better and so generally undeserving of a place on this world.
Chico’s profit slides 22% on higher costs
By Erin McCarthy
Chico’s FAS Inc. said its fiscal first-quarter profit declined 22% as the women’s apparel retailer reported higher costs and expenses, which offset a slight increase in sales.
The retailer, which operates Chico’s stores and the Soma Intimates and White House/Black Market chains, has posted softer profits in recent quarters due to decreased traffic, fewer transactions and lower customer spending per purchase.
Earlier this month, Chico’s said it plans to bring its namesake brand to Canada, the latest in a string of moves by U.S. retailers expanding north of the border. The company said it will open three Canadian boutiques in Toronto-area shopping malls in late August.
For the quarter ended May 3, Chico’s reported a profit of $39.9 million, or 26 cents a share, compared with a year-earlier profit of $51.1 million, or 31 cents a share. Sales edged up 1.6% to $681.6 million.
Analysts polled by Thomson Reuters had recently forecast adjusted earnings of 28 cents a share on revenue of $679 million.
Same-store sales fell 2.6% in the latest period, following flat same-store sales growth a year earlier, partly because of lower average dollar sales amid less traffic.
DSW cuts guidance as sales, profit miss views
By Michael Calia
DSW Inc. said rough weather and competitive discounting weighed on its fiscal first-quarter sales, although earnings rose as margins widened.
The results fell short of analysts’ expectations.
The discount shoe retailer also slashed its full-year per-share earnings guidance by 35 cents on each end to a range of $1.45 to $1.60 as it expects a same-store sales decline in the low single digits. Previously the company said it expected full-year same-store sales growth in the low single-digit range.
In the most recent period, same-store sales fell 3.7%, DSW said.
Thanks in part to Edward Bernays, American’s will consume anything.
1950’s commercial selling actual RADIOACTIVE DUST (even holding up a Geiger Counter to the girls skin) as a way to become more beautiful.
This is truly crazy shit.
The only thing worse than Scatological writers are self-righteous ones…
ZombieDawg—-You ignored Einstein’s quote. Without going into a long dissertation on the ‘nature of man’ and psychology, suffice to say we believe differently. There is some truth to the statement that “perception creates reality”. Of course, man will fix things. We all operate consistent with our belief system, without exception. The belief system is a construct of the Ego. Collectively this creates a paradigm, what we collectively believe is reality to the Ego. But there is also a unconscious and a super conscious aspect of man.
There will be a paradigm change and that happens when our perceptions can no longer be reconciled with our belief system. The super conscious is aware of everything unlike the ego, which is the tip of the iceberg. The super conscious is the iceberg. This paradigm change will come through a change in consciousness (Ego) from the Super Conscious. The world will seem different and it will be. We will think, “How could we have ever thought that fiat money and all the old ways were real”.
Admin by writing this column is aiding that transformation. Bless him for his courage.
ZombieDawg I can’t help take notice of your moniker. Is this the way you perceive man? A zombie and a dog? “’cos we’re too stupid a species to do better and so generally undeserving of a place on this world. ” Interesting! I would disagree.
Homer:
No, I didn’t ignore Einstein’s quote at all, nor do I fail to grasp its meaning.
Yes indeed we think differently which is a good thing ! I’m usually misunderstood as my thought processes are different to most peoples – a fact I’m eternally grateful for.
Ahhh…if only there was some super conscious (ness) beyond the super-ego.
As you may know Mike Ruppert (Collapsenet) blew his brains out recently after years of depression, and was chasing the ever elusive “higher plane of existence” beyond this mere ephemeral one all that time. Well, I think he’s feeding the worms nicely but that’s about all.
I wish I could move to a higher plane too as I don’t like this one much but I believe humankind is probably never going to reach such a plane (mankind is DE-evolving !), at least not until a global cataclysmic event FORCES a rethink & restructuring of human life/thought/actions. Think “The day the Earth stood still” movie.
Only on the precipice will change occur. ie the paradigm shift you refer to no doubt.
As for the ZombieDawg handle – I chose it deliberately for it’s humorous nature and to quickly identify the ‘tards out there who would sooner attack the poster rather than the post. Works well 😉
Ha ha…
No, I’m not referring to you either 🙂
Have a good day mate !
“We are generally undeserving of a place on this world”
Gotta say, much hinges on the definition of “generally”.
Is the Free Shit Army deserving of a place? People that are parasites on the ass of the rest of humanity? Are the murdering scum that populate large swathes of the world? Are the despots and their cronies? etc?
Maybe “generally” is too broad a term, but for sure and certain a great many on this planet do not “deserve” a place on it. Glad I am not responsible for judging who is and is not deserving. Deserving probably has nothing to do with it.
I 100% agree that mankind is de-evolving, per what Zombie has said. How can it be any other way? Used to be that the survival of the fittest was the rule. Today, folks are surviving, and breeding, that previously would not have passed their genes along. The overall genetic pool is indeed declining.
Y’know I take exception to tarring everyone with the same brush as far as the free shit army concept goes.
Granted there is no shortage of welfare freeloaders in every country who will avoid work like the plague at all costs, but then there are far far more decent honest hardworking people who’ve just lost everything through no fault of their own but rather from the global corrupt fucked up mess of an economic collapse we’re in now.
I’ve been unemployed a few times, lost everything but the clothes on my back once from a nightmare I won’t even begin to go into, fought back and won.
Fine – if you’re a chain smoking no-hope bum who wants the government to fund his fags, booze and public housing costs for the rest of his life then cut off their money supply. No issues there!
However, if you’re one of the majority who desperately want to work and NOT be a burden on the system then at least give them credit for that eh ?
I used the word “generally” deliberately – not out of vagueness but rather to highlight the fact that most everything we humans do is deleterious to the planet. We as a species are totally out of touch with reality and nature and when nature bites back trying to re-establish equilibrium we will truly pay the price. We are seeing this worldwide now on so many levels from species die-off & extinction to unprecedented weather events.
We act without fully understanding the consequences or without caring about the consequences.
The good we do is predominantly to compensate for the bad done before it.
Ironically it’s the “primitive” cultures that are the “good ones” – the ones that deserve to survive.
The future ? Try this as a sample – interesting to note too how attempts at closed “bubble” communities have ALL failed miserably on both social, technological and sustainability levels.
Does NOT bode well for the future at all should such concepts be the means of survival on a dying world.
http://motherboard.vice.com/read/the-giant-chinese-odor-dome-and-other-ideas-for-surviving-our-future-cities
Zombie you say ” there are far far more decent honest hardworking people who’ve just lost everything through no fault of their own” than freeloaders.
Fucking bullshite. You are deluded.
Hardly anyone has “no fault”. Bad decisions usually play a part in one’s troubles – bad decisions re debt, skill acquisition, education acquisition, marital partner, job or career choice, etc etc etc.
But even giving allowances for that – there are 10 MILLION fucking people on disability at the moment. How many of those are really disabled. There are millions and millions of baby mommas sucking up bennies. There are untold legions of folks getting snap cards. There are huge numbers of folks abusing student loans.
And let’s not even talk about SS and medicare and medicaid (and that “I paid in and earned it crap is bullshit – people receive far more than they ever paid in – they are delusional that they “earned” it. They are simply taking money from the young.).
The FSA is far, far bigger than you give it credit for.
Abercrombie’s loss widens amid weak teen-retail market
By Ben Fox Rubin
Abercrombie & Fitch Co. said its fiscal first-quarter loss widened, with the teen-apparel retailer still struggling with lighter demand and weaker sales.
Abercrombie (NYSE:ANF) has been working to turn around softer sales as store traffic started to drop last year. Chief Executive Mike Jeffries recently said that trend was showing no signs of abating.
“In what remains a difficult teen retail environment, we are pleased that earnings for the quarter were in line with our expectations,” Mr. Jeffries said Thursday.
Abercrombie has been grappling with disappointing sales at home and abroad, inventory challenges and increased markdowns. The retailer in February said it would cut costs for its clothing, which could allow it to lower prices without significantly hurting margins.
Overall, Abercrombie reported a loss of $23.7 million, or 32 cents a share, compared with a year-earlier loss of $7.2 million, or nine cents a share.
RE: the student dept in the mix…I work for a college, and the number of students who buy clothes, shoes, games, steroes, tv’s,,electronics, etc etc etc everyday and have it shipped to them is staggering…i mean are they going to school or just shopping all day?..seems it s all they do..so yes, i believe most of their tuition is going on other than school..
The thing that I’ve been fascinated with over the years since the last deflationary collapse (2008) is the way demographics are shifting in response to regional collapse.
It has been a steady build here, the way people from all over the US have moved here in droves, attracted by lower taxes and a low employment rate. I predict that this will only ACCELERATE as the effects of Peak Oil (and peak everything else) cause another market collapse and accompanying leg down affecting the prices of all kinds of assets, particularly real estate.
So here, the short term affect of the coming collapse of 2014-2016 (which most of the readers here know has been predicted by long wave guys like Marty Armstrong for a long time) will actually be to drive more and more people from the decaying Eastern cities to the Sunbelt.
Of course, as Kunstler and others have said, this is ultimately a disaster waiting to happen, because we don’t have enough resources (particularly water) to support the new waves of “immigrants” from other states. And the jobs are a crapshoot. Here today, gone tomorrow.
Our economic model of infinite growth, which is sacrosanct in the Great State of Texas, does nothing to prevent the eventual crash that will almost certainly occur at some date in the not too distant future. It is interesting, and more than a little tragic from my POV to watch this all play out in real time.
Express profit tumbles as sales slump
By Erin McCarthy
Express Inc. said its fiscal first-quarter earnings tumbled 84% as the specialty retail apparel chain reported a drop in sales.
Shares fell 12% to $11.96 in after-hours trading as the company lowered its full-year profit outlook and offered fiscal second-quarter earnings guidance that missed Wall Street’s expectations.
“Our second quarter results will be impacted by the need to move through slow selling spring inventory and a Memorial Day event that did not drive traffic as successfully as last year,” said Chief Executive Michael Weiss, adding that the company’s full-year outlook incorporates the impact of a “very challenging first half, while anticipating sequential improvements in comparable sales in quarters 2 through 4.”
For the period ended May 3, Express reported a profit of $5.1 million, or six cents a share, down from $32.4 million, or 38 cents a share, a year earlier.
Express had expected per-share earnings of 12 cents to 18 cents.
Revenue fell 9.6% to $460.7 million, below analysts’ estimates of $464 million.
Comparable-store sales, which include Internet sales, fell 11%. The company had warned in March that same-store sales would likely decline in the low double digits to high single digits for the quarter.
The company also said it plans to close about 50 stores over the next 36 months, a move that is expected to result in profit improvement of $5 million to $8 million once stores are closed.
100! I win!
Great thread, Admin.
Recessions come along now and then. Governmental actions try to delay the effects, but such efforts usually just puts more fuel on the fire, so to speak. So here we are with another recession which just may tilt into a depression courtesy of politics.
Administrator, STOP, enough is enough, I can’t take it anymore. I want to go back to my beer and pizza and Monday Nite football….What?…my wife just said there isn’t anymore Monday Nite football…Crap!… When did that happen? I am so out of it.
Like I said Admin, “This is the best piece you have written”. It has even startled me. I ‘ve been telling my family, this and what was and is going to happen for over 40 years. All it has gotten me was to be relegated to the children’s table at Thanksgiving, every year. I couldn’t believe that it would take so long for things to unravel. I’m unhappy. I never wanted to see things unfold like this…But, what is is.
Hopefully your piece will be a clarion call to the readers to prepare even at this late date for a tumultuous
future, where life, liberty and sanity will be severely tested.
“Evil most often disguises it’s self as good or it wouldn’t be so readily accepted by everyone.”–Homer
We tend to focus on the larger public companies because their financial results are out there for all to see, but what about the mom and pop shops the small family restaurants, small contractors and shop keepers. The few of those that are left are struggling even worse.
Strip malls in our area, which is where those type of businesses used to thrive are slowly getting emptier. As an example we have have one not to far from where we live that is on a busy arterial street, lots of traffic, with a Safeway store as the anchor, typical strip mall, McShits out by the street, Shell station next to it, then small shops side by side on either side of the Safeway. Nine months ago all the small shops were occupied with a Mexican restaurant, a Teriyaki restaurant, nail salon, barbershop, bagel joint, ice cream parlor, auto supply, family dry cleaner, knick knack gift shop etc. Today all that remains open next to the Safeway is the nail salon and the barbershop, all the other store fronts have the space for rent sign. So where do all these people go to find work.
The snowball seems to be rolling down hill and it is getting bigger all the time.
What I meant to say was, ““Evil most often disguises it’s self as good or it wouldn’t be so readily accepted by so many.”–Homer
Lipoh:
I KNEW you’d say this:
“Hardly anyone has “no fault”. Bad decisions usually play a part in one’s troubles – bad decisions re debt, skill acquisition, education acquisition, marital partner, job or career choice, etc etc etc.”
..and you are of course quite right, but…the difference (and key issue) is separating those who constitute (and want to be) permanent burdens on “the system” from those that don’t.
Have you ever been unemployed and homeless ? Dumpster dived ? Not eaten in 3 days?
Why is a “help up” rather than a “hand out” so offensive ?
Do you really hate your fellow man so much ?
As we’re seeing globally the “age of entitlement” is ending BUT common decency and assistance to your fellow man shouldn’t for what does that make us as a species ?
Perhaps the kind of species I said, with the same future…
Reap what you sow.
Zombie – my starting point in life was abject poverty. Boohoo for me.
I am all for private hand-ups. Public hand-ups ALWAYS turn into massive hand-outs. No one controls the hand-outs. See SSDI for Exhibit A – millions of people flocking to it rather than being required to work.
The government should have ZERO role in charity. None whatsoever. I am currently FORCED to pay hundreds of thousands in charity each year. Am I incapable of deciding what to do with that money myself? Could not that money be better spent than by govt asshats?
And where is familial responsibility? Govt has assumed the role rightfully belonging to families. Any surprise the family has disintegrated?
Bad decisions on your part do not confer upon me any responsibility whatsoever to bail you out. If I choose to help, that is one thing, but taking my money at gunpoint is theft, pure and simple. And that is what is being done.
.
ZombieDawg–It is interesting your saying, “Reap what you sow. ” This is the ‘Law of Karma’. A universal law which applies to us all without exception. It is stated many ways, what you create in the lives of others, you experience in you own life; reap what you sow; what goes around comes around. It is perfect justice. Not as a punishment, but as learning experience. It is the way you see the consequences of your thoughts and action by experiencing them yourself. Yes, thoughts count too. Edgar Cayce talked about this in great detail. It’s the way you grow spiritually.
I know what you’re thinking. But…what about that guy that gets away with murder doing what ever he wants, lives the good life and never get caught. Viewed over this lifetime it seem very unjust especially when compared with people who lived a proper life and suffered great tragedy. Oh! … How the world has suffered so! But…Viewed over many lifetimes, justice will be seen to be done. “We learn from our mistakes.” Ever hear of that?
We should temper suffering with kindness and understanding and give what we can, even if it is only a smile or word of encouragement. Great things are built upon simple things. …There but for the grace of God goes I. We give not for others, as much, as for ourselves. It just makes us a better person.