Barack Obama recently stated that anyone that is claiming that America’s economy is in decline is “peddling fiction“. Well, if the economy is in such great shape, why are major retailers shutting down hundreds of stores all over the country? Last month, I wrote about the “retail apocalypse” that is sweeping the nation, but since then it has gotten even worse. Closing stores has become the “hot new trend” in the retail world, and “space available” signs are going up in mall windows all over the United States. Barack Obama can continue huffing and puffing about how well the middle class is doing all he wants, but the truth is that the cold, hard numbers that retailers are reporting tell an entirely different story.
Earlier today, Sears Chairman Eddie Lampert released a letter to shareholders that was filled with all kinds of bad news. In this letter, he blamed the horrible results that Sears has been experiencing lately on “tectonic shifts” in consumer spending…
In a letter to shareholders on Thursday, Lampert said the impact of “tectonic shifts” in consumer spending has spread more broadly in the last year to retailers “that had previously proven to be relatively immune to such shifts.”
“Walmart, Nordstrom, Macy’s, Staples, Whole Foods and many others have felt the impact of disruptive changes from online competition and new business models,” Lampert wrote.
And it is very true – Sears is doing horribly, but they are far from alone. The following are 13 major retailers that are closing down stores…
#2 It is being reported that Sports Authority will file for bankruptcy in March. Some news reports have indicated that around 200 stores may close, but at this point it is not known how many of their 450 stores will be able to stay open.
#3 For decades, Kohl’s has been growing aggressively, but now it plans to shutter 18 stores in 2016.
#4 Target has just finished closing 13 stores in the United States.
#5 Best Buy closed 30 stores last year, and it says that more store closings are likely in the months to come.
#6 Office Depot plans to close a total of 400 stores by the end of 2016.
#11 The Gap is in the process of closing 175 stores in North America.
#12 Aeropostale is in the process of closing 84 stores all across America.
#13 Finish Line has announced that 150 stores will be shutting down over the next few years.
These store closings can be particularly cruel for small towns. Just consider the impact that Wal-Mart has had on the little town of Oriental, North Carolina…
The Town’n Country grocery in Oriental, North Carolina, a local fixture for 44 years, closed its doors in October after a Wal-Mart store opened for business. Now, three months later — and less than two years after Wal-Mart arrived — the retail giant is pulling up stakes, leaving the community with no grocery store and no pharmacy.
Though mom-and-pop stores have steadily disappeared across the American landscape over the past three decades as the mega chain methodically expanded, there was at least always a Wal-Mart left behind to replace them. Now the Wal-Marts are disappearing, too.
Of course there are many factors involved in this ongoing retail apocalypse. Competition from online retailers is becoming more intense, and consumer spending patterns are rapidly changing.
But in the end, the truth is that you can’t get blood out of a rock. The middle class in America is shrinking, and there just isn’t as much discretionary spending going on as there used to be.
And now that we have entered a new economic downturn, many retailers are finding that there are some local communities that can no longer support their stores. The following comes from CNBC…
Though the shift to online shopping is no doubt playing a role in lighter foot traffic at malls, there’s more to their changing economics than the rise of Amazon. Changing demographics in a town are another reason a shopping center could struggle or fail — for example, if massive layoffs in a particular industry cause people to move away to find employment.
“A lot of people want to try and tie it to the Internet or ‘that’s not cool,’ or teens don’t like it,” Jesse Tron, a spokesman for industry trade group International Council of Shopping Centers, told CNBC last year. “It’s hard to support large-format retail in those suburban areas when people are trying to just pay their mortgage.”
In order to have a thriving middle class, we need good paying middle class jobs. Unfortunately, our economy has been bleeding those kinds of jobs quite rapidly. For example, Halliburton just announced that it is eliminating 5,000 more jobs after getting rid of 4,000 workers at the end of last year.
During the Obama years, good paying middle class jobs have been getting replaced by low paying service jobs. At this point, 51 percent of all American workers make less than $30,000 a year.
And there is no way that you can support a middle class family with children on $30,000 a year.
We have an economy that is in the process of failing. We can see it in the explosion of subprime auto loans that are going bad, we can see it in the hundreds of retail stores that are shutting down, and we can see it in the tens of thousands of good paying energy jobs that are being lost.
During the Obama years, interest rates have been pushed to the floor, the Federal Reserve has created trillions of dollars out of thin air, and the size of our national debt is getting close to doubling. Despite all of those desperate measures, our economy continues to crumble.
We stole from the future to try to paper over our failures and it didn’t work. Now an economic downturn that will ultimately turn out to be even worse than the “Great Recession” of 2008 and 2009 has begun, and our leaders have absolutely no idea how to fix things.
I wish I had better news to report, but I don’t. Get prepared now, because very rough times are ahead.
As bad as the month of January was for the global economy, the truth is that the rest of 2016 promises to be much worse. Layoffs are increasing at a pace that we haven’t seen since the last recession, major retailers are shutting down hundreds of locations, corporate profit margins are plunging, global trade is slowing down dramatically, and several major European banks are in the process of completely imploding. I am about to share some numbers with you that are truly eye-popping. Each one by itself would be reason for concern, but when you put all of the pieces together it creates a picture that is hard to deny. The global economy is in crisis, and this is going to have very serious implications for the financial markets moving forward. U.S. stocks just had their worst January in seven years, and if I am right much worse is still yet to come this year. The following are 22 signs that the global economic turmoil that we have seen so far in 2016 is just the beginning…
1. The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.
2. The Baltic Dry Index just hit yet another brand new all-time record low. As I write this article, it is sitting at 303.
8. A series of extremely disappointing corporate quarterly reports is sending stock after stock plummeting. Here is a summary from Zero Hedge of a few examples that we have just witnessed…
SHARES OF LIONS GATE ENTERTAINMENT FALL 5 PCT IN EXTENDED TRADE AFTER QUARTERLY RESULTS – RTRS
TABLEAU SOFTWARE SHARES TUMBLE 40 PCT IN AFTER HOURS TRADING – RTRS
YRC WORLDWIDE SHARES DOWN 16.4 PCT AFTER THE BALL FOLLOWING RESULTS – RTRS
SPLUNK INC SHARES DOWN 7.6 PCT IN AFTER HOURS TRADING – RTRS
LINKEDIN SHARES EXTEND DECLINE, DOWN 24 PCT AFTER RESULTS, GUIDANCE – RTRS
HANESBRANDS SHARES FURTHER ADD TO LOSSES IN EXTENDED TRADE, LAST DOWN 14.9 PCT – RTRS
OUTERWALL SHARES FALL 11 PCT IN EXTENDED TRADING AFTER QUARTERLY RESULTS – RTRS
GENWORTH SHARES DOWN 16.5 PCT AFTER THE BELL FOLLOWING RESULTS, RESTRUCTURING PLAN
9. Junk bonds continue to crash on Wall Street. On Monday, JNK was down to 32.60 and HYG was down to 77.99.
10. On Thursday, a major British news source publicly named five large European banks that are considered to be in very serious danger…
Deutsche Bank, Credit Suisse, Santander, Barclays and RBS are among the stocks that are falling sharply sending shockwaves through the financial world, according to former hedge fund manager and ex Goldman Sachs employee Raoul Pal.
11. Deutsche Bank is the biggest bank in Germany and it has more exposure to derivatives than any other bank in the world. Unfortunately, Deutsche Bank credit default swaps are now telling us that there is deep turmoil at the bank and that a complete implosion may be imminent.
12. Last week, we learned that Deutsche Bank had lost a staggering 6.8 billion euros in 2015. If you will recall, I warned about massive problems at Deutsche Bank all the way back in September. The most important bank in Germany is exceedingly troubled, and it could end up being for the EU what Lehman Brothers was for the United States.
13. Credit Suisse just announced that it will be eliminating 4,000 jobs.
14. Royal Dutch Shell has announced that it is going to be eliminating 10,000 jobs.
15. Caterpillar has announced that it will be closing 5 plants and getting rid of 670 workers.
16. Yahoo has announced that it is going to be getting rid of 15 percent of its total workforce.
17. Johnson & Johnson has announced that it is slashing its workforce by 3,000 jobs.
18. Sprint just laid off 8 percent of its workforce and GoPro is letting go 7 percent of its workers.
19. All over America, retail stores are shutting down at a staggering pace. The following list comes from one of my previous articles…
-Wal-Mart is closing 269 stores, including 154 inside the United States.
22. The global economy desperately needs the price of oil to go back up, but Morgan Stanley says that we will not see $80 oil again until 2018.
It is not difficult to see where the numbers are trending.
Last week, I told my wife that I thought that Marco Rubio was going to do better than expected in Iowa.
How did I come to that conclusion?
It was simply based on how his poll numbers were trending.
And when you look at where global economic numbers are trending, they tell us that 2016 is going to be a year that is going to get progressively worse as it goes along.
So many of the exact same things that we saw happen in 2008 are happening again right now, and you would have to be blind not to see it.
Hopefully I am wrong about what is coming in our immediate future, because millions upon millions of Americans are not prepared for what is ahead, and most of them are going to get absolutely blindsided by the coming crisis.
Once upon a time, “Black Friday” was a major event in the United States. Yes, the mainstream media is still endlessly hyping it up, and major retailers are still rolling out their “incredible deals”, but it appears that most Americans are tiring of this particular gimmick. Or perhaps it is just that U.S. consumers don’t have as much discretionary income as they once did. As you will see below, retail traffic this Black Friday was “much, much slower” than anticipated. And expectations were not great anyway – the number of shoppers was down last year, and it was being projected that there would be another decline in 2015. Yes, there were still a few fights on Black Friday, but mostly the “holiday” was marked by giant piles of unsold merchandise sitting around collecting dust. The inventory to sales ratio in the U.S. has surged to levels not seen since the last recession, and so the truth is that most retailers were hoping for much more contrived chaos on Black Friday than we actually witnessed.
Personally, I wish that this whole phenomenon would just simply disappear, because it definitely doesn’t bring out the best in the American people.
Who wants to see fellow citizens trampling one another and fighting with one another for cheaply made electronics that aren’t even manufactured in this country anyway?
Black Friday was always a disgusting spectacle, and now it appear to be fading.
Let’s start with Thanksgiving sales. More stores than ever are opening on Thanksgiving Day itself, and according to SunTrust that was a total “bust” this year…
We believe Thanksgiving shopping was a bust. We note that traffic seemed below last year both on- and off-mall. Members of our team who went to the malls first had no problem finding parking or navigating stores. Crowds were tame and, with some exceptions there seemed to be more browsing than buying and less items purchased. We heard many people discussing that deals were not that compelling compared to years past. Interestingly, many retailers closed at midnight- which contributed to a sharp decline in traffic shortly thereafter. Off-mall, members of our team visited Walmart and Target for the openings and had no problem finding parking. Customers at both were focused on electronics. Lines, even early, were about half of what they were last year and quickly dissipated. The only off-mall big box retailer we visited with consistently long lines and customers making multiple item purchases was Kohl’s — where buys were focused on deals not available online.
At the Mall of America in Minneapolis, the largest in the country, Edward Yruma, managing director at KeyBanc Capital Markets, said he’s seeing less traffic than years past as well. He was there from 6 p.m. to 1 a.m. last night and arrived again at 8 a.m. this morning.
“It doesn’t look much busier than an average Saturday morning,” said Yruma.
Jeff Simpson, a director at Deloitte Consulting LLP’s retail practice, surveyed shopping centers in North Carolina and saw smaller crowds than expected for Black Friday.
“Across the board, much less traffic than was anticipated,” he said. “Much, much slower.”
Of course this wasn’t much of a surprise. A global recession has already begun, and investors were dumping retail stocks ahead of Thanksgiving in anticipation of a horrible shopping season. The following comes from the New York Post…
Wall Street, fearful that consumers are running out of cash heading into the crucial Christmas retail season, are selling off retail stocks and everything else sensitive to consumer spending.
Just look at what is happening to healthcare costs. It turns out that employees that work for medium and large companies in the U.S. are now paying more than double for health insurance than they were a decade ago…
Employees of midsize and large companies in 2015 paid an average of $4,700 for their health insurance, up from $2,001 in 2005, according to recent analysis from Aon Hewitt.
In China, equities saw a significant sell off as a result of investigations by the Chinese securities regulatory body into several brokerages for breaking regulations. The Shanghai Composite closed 199 points, or 5.48 percent, lower; the Shenzhen Composite closed 6.1 percent lower, the Chinext was down 6.1 percent, and the CSI300 Index saw a decline of 5.38 percent.
Chinese brokerages took major hits, with Citic Securities, Founder Securities, and China Merchants closing 10.1, 10, and 9.98 percent lower after news broke that the China Securities Regulatory Commission (CSRC) has launched investigations into these firms to weed out short selling and speculation.
I hope that you enjoyed this Thanksgiving as much as you possibly could, because all of the underlying economic numbers are absolutely screaming that hard times are ahead.
This year, Americans are going to spend an average of $130 on “self-gifting” and more than $800 on the holiday season overall. People are spending money that they don’t have on things that they don’t need, and meanwhile very few of us are actively preparing for what promises to be a very challenging 2016.
So yes, let us enjoy the time that we have with our families, but let us also not be completely oblivious to the huge changes that are literally happening all around us.
If the U.S. economy really is improving, then why are big U.S. retailers permanently shutting down thousands of stores? The “retail apocalypse” that I have written about so frequently appears to be accelerating. As you will see below, major U.S. retailers have announced that they are closing more than 6,000 locations, but economic conditions in this country are still fairly stable. So if this is happening already, what are things going to look like once the next recession strikes? For a long time, I have been pointing to 2015 as a major “turning point” for the U.S. economy, and I still feel that way. And since I started The Economic Collapse Blog at the end of 2009, I have never seen as many indications that we are headed into another major economic downturn as I do right now. If retailers are closing this many stores already, what are our malls and shopping centers going to look like a few years from now?
The list below comes from information compiled by About.com, but I have only included major retailers that have announced plans to close at least 10 stores. Most of these closures will take place this year, but in some instances the closures are scheduled to be phased in over a number of years. As you can see, the number of stores that are being permanently shut down is absolutely staggering…
180 Abercrombie & Fitch (by 2015)
75 Aeropostale (through January 2015)
150 American Eagle Outfitters (through 2017)
223 Barnes & Noble (through 2023)
265 Body Central / Body Shop
66 Bottom Dollar Food
25 Build-A-Bear (through 2015)
32 C. Wonder
120 Chico’s (through 2017)
200 Children’s Place (through 2017)
17 Christopher & Banks
70 Coach (fiscal 2015)
70 Coco’s /Carrows
300 Deb Shops
340 Dollar Tree/Family Dollar
39 Einstein Bros. Bagels
50 Express (through 2015)
31 Frederick’s of Hollywood
50 Fresh & Easy Grocey Stores
65 Future Shop (Best Buy Canada)
54 Golf Galaxy (by 2016)
50 Guess (through 2015)
127 Jones New York Outlet
10 Just Baked
28 Kate Spade Saturday & Jack Spade
400 Office Depot/Office Max (by 2016)
63 Pep Boys (“in the coming years”)
100 Pier One (by 2017)
20 Pick ’n Save (by 2017)
1,784 Radio Shack
13 Ruby Tuesday
10 SpartanNash Grocery Stores
55 Staples (2015)
133 Target, Canada (bankruptcy)
31 Tiger Direct
200 Walgreens (by 2017)
10 West Marine
338 Wet Seal
80 Wolverine World Wide (2015 – Stride Rite & Keds)
So why is this happening?
Without a doubt, Internet retailing is taking a huge toll on brick and mortar stores, and this is a trend that is not going to end any time soon.
What we find is that over the past 6 months we had a tremendous drop in true discretionary consumer spending. Within the overall downtrend we do see a bit of a rally in February but quite ominously that rally failed and the bottom absolutely fell out. Again the importance is it confirms the fundamental theory that consumer spending is showing the initial signs of a severe pull back. A worrying signal to be certain as we would expect this pull back to begin impacting other areas of consumer spending. The reason is that American consumers typically do not voluntarily pull back like that on spending but do so because they have run out of credit. And if credit is running thin it will surely be felt in all spending.
The truth is that middle class U.S. consumers are tapped out. Most families are just scraping by financially from month to month. For most Americans, there simply is not a whole lot of extra money left over to go shopping with these days.
In fact, at this point approximately one out of every four Americans spend at least half of their incomes just on rent…
More than one in four Americans are spending at least half of their family income on rent – leaving little money left to purchase groceries, buy clothing or put gas in the car, new figures have revealed.
A staggering 11.25 million households consume 50 percent or more of their income on housing and utilities, according to an analysis of Census data by nonprofit firm, Enterprise Community Partners.
And 1.8 million of these households spend at least 70 percent of their paychecks on rent.
The surging cost of rental housing has affected a rising number of families since the Great Recession hit in 2007. Officials define housing costs in excess of 30 percent of income as burdensome.
For decades, the U.S. economy was powered by a free spending middle class that had plenty of discretionary income to throw around. But now that the middle class is being systematically destroyed, that paradigm is changing. Americans families simply do not have the same resources that they once did, and that spells big trouble for retailers.
As you read this article, the United States still has more retail space per person than any other nation on the planet. But as stores close by the thousands, “space available” signs are going to be popping up everywhere. This is especially going to be true in poor and lower middle class neighborhoods. Especially after what we just witnessed in Baltimore, many retailers are not going to hesitate to shut down underperforming locations in impoverished areas.
And remember, the next major economic crisis has not even arrived yet. Once it does, the business environment in this country is going to change dramatically, and a few years from now America is going to look far different than it does right now.
Retail sales during the four day Thanksgiving weekend were down a whopping 11 percent from last year. This is a “make or break” time of the year for many retailers, and if things don’t turn around during the coming weeks we could see a tsunami of store closings in January and February. As you read this article, there is already more than a billion square feet of retail space sitting empty in the United States. Many have described the ongoing collapse of the retail industry as an “apocalypse”, and this apocalypse appears to be accelerating. Yes, the shift to online retailers is a significant factor, but as you will see below even online retailers struggled over the holiday weekend. The sad truth of the matter is that U.S. consumers are tapped out and are drowning in debt at this point, so they simply do not have as much money to spend as they once did.
According to the National Retail Federation, 5.2 percent fewer Americans shopped online or at retail stores over the past weekend. Those that did shop spent an average of 6.4 percent less money than consumers did last year.
So if less people shopped, and they spent less money on average, that means that total retail sales must have been way down.
And indeed they were. As the New York Times has reported, total retail sales were down an astounding 11 percent…
Sales, both in stores and online, from Thanksgiving through the weekend were estimated to have dropped 11 percent, to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day.
And though many retailers offered the same aggressive discounts online as they did in their stores, the web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year, the group said. The average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year.
No wonder there was less violence on Black Friday this year.
Traffic at retailers was way down.
Of course some analysts are trying to put a positive spin on all of this. For example, the CEO of the National Retail Federation says that this could actually be a sign that the economy is improving…
As the WSJ reports, NRF’s CEO Matt Shay attributed the drop to a combination of factors, including the fact that retailers moved promotions earlier this year in attempt to get people out sooner and avoid what happened last year when people didn’t finish their shopping because of bad weather.
Also did we mention the NRF is perpetually cheery and always desperate to put a metric ton of lipstick on a pig? Well, hold on to your hats folks:
He also attributed the declines to better online offerings and an improving economy where “people don’t feel the same psychological need to rush out and get the great deal that weekend, particularly if they expected to be more deals,” he said.
And of course the sprint vs marathon comparisons, such as this one: “The holiday season and the weekend are a marathon not a sprint,” NRF Chief Executive Officer Matthew Shay said on a conference call. Odd how that metaphor is never used when the (seasonally-adjusted) sprint beats the marathoners.
So there you have it: a 11% collapse in retail spending has just been spun as super bullish for the US economy, whereby US consumers aren’t spending because the economy is simply too strong, and the only reason they don’t spend is because they will spend much more later. Or something.
The retail industry is absolutely brutal at this point. It is flooded with very large competitors that are chasing fewer and fewer disposable dollars.
In order to thrive, retailers need financially healthy consumers. But over time, U.S. consumers have been getting deeper and deeper into debt. The chart posted below shows that consumer credit in the United States has doubled since the year 2000…
Meanwhile, the long-term trend for real median household income since the year 2000 has been down…
In order for Americans to spend money, they have to make money first.
Unfortunately, the quality of our jobs continues to plummet.
As I have written about previously, 50 percent of all American workers currently make less than $28,031 a year at their jobs. And here are some more numbers from a report that the Social Security Administration recently released…
-39 percent of American workers made less than $20,000 last year
-52 percent of American workers made less than $30,000 last year
-63 percent of American workers made less than $40,000 last year
-72 percent of American workers made less than $50,000 last year
So in order for a typical American family to bring in $50,000 a year or more both parents usually have to work.
Sometimes they both have to work more than one job.
And with the cost of living constantly rising, family budgets are being squeezed more than ever. That is why families have less money to spend at retail stores these days. For even more on the current financial condition of American families, please see my previous article entitled “Are You Better Off This Thanksgiving Than You Were Last Thanksgiving?”
It is time for retailers in America to face the fact that economic conditions have fundamentally changed. U.S. consumers simply are not in as good shape as they used to be.
In addition, online retailers are going to continue to steal sales from traditional retail locations. This means that more stores are going to close and more retail space is going to be abandoned.
Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America’s shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.
In the years ahead, it is going to become normal to see boarded up strip malls and abandoned shopping centers all over the country.
The golden age of retail is over, and now most retailers will have to work incredibly hard to survive the apocalypse that is unfolding right before our eyes.
It is that magical time of the year for retailers. The period between mid-October and late December can often make the difference between success or failure in the retail industry, and this year will be no exception. As you will see below, it is being projected that Americans will spend a massive amount of money this holiday season. In fact, what Americans plan to spend on Christmas this year is greater than the yearly GDP of the entire nation of Sweden. So isn’t this good economic news? Shouldn’t we be happy that Americans are opening up their wallets so eagerly? Well, it depends how you look at it. Even though our spending is increasing, our incomes are not. As I discussed the other day, 50 percent of American workers make less than 28,031 dollars a year and incomes have been stagnant for years. That means that any increases in spending must be funded by more debt, and that is not good news at all.
In 2014, approximately 70 percent of all Americans will participate in Halloween. It seems like with each passing year this dark holiday become even more popular, and before it is all said and done it is being projected that Americans will spend a whopping 7.4 billion dollars this time around…
Kicking off the end of year spending season is Halloween. Just how much do Americans spend on trick-or-treating and other Halloween festivities? The National Retail Federation (NRF) forecasts total Halloween spending—including candy, costumes, and decorations—to come in at $7.4 billion this year.
That 7.4 billion dollars includes 2 billion dollars for Halloween candy and 350 million dollars for pet Halloween costumes.
Yes, you read that correctly. We are collectively going to spend 350 million dollars on Halloween costumes for our cats and dogs.
Overall, spending on Halloween has risen by more than 55 percent since 2005. It just seems like Americans can’t get enough of this particular holiday.
But of course what Americans spend on Halloween is not even worth comparing to what Americans spend on Christmas.
According to the National Retail Federation, more than 90 percent of Americans celebrate either Christmas, Kwanza or Hanukkah.
And Christmas in particular has become virtually synonymous with materialism. This year, the National Retail Federation is projecting that Americans will spend more than 600 billion dollars just on Christmas.
That represents a huge chunk of our GDP as a nation.
Most of that money will be spent on Christmas gifts. According to a Gallup survey that was just released, the average U.S. adult plans to spend 781 dollars on Christmas gifts this year, which is significantly up from last year…
Americans’ initial estimates of the total amount they will spend on Christmas gifts this year point to an above-average holiday season for the nation’s retailers. While Gallup’s October spending forecast is a warm-up to its key measure in November, it finds Americans expecting to spend $781, on average, up from $704 last November.
Of course holiday spending does not end there. There are trees to put up, packages to send out and decorations to buy. The following numbers are from a Forbes article about what an average American typically spends during a Christmas season…
Christmas Tree: $41.50
Cards And Postage: $32.43
Floral Arrangements: $22.61
Food And Candy: $95.04
So where is all of this money coming from?
That is a key question.
If our incomes were going up, all of this spending might be good news. But as the following chart from the Federal Reserve demonstrates, that is not the case…
Our incomes are stagnant at best. But Americans always like to party as if it were the best of times. So they will pull out their credit cards and spend what they feel they need to spend in order to feel happy once again this year.
But deep down most people realize that this debt-fueled party cannot last forever.
Nearly 7 in 10 Americans are angry at the direction the country is headed and 53% of Americans disapprove of President Barack Obama’s job performance, two troubling signs for Democrats one week before the midterm elections, a new CNN/ORC International Poll shows.
Democrats are battling to try and save the Senate majority, while hoping to prevent more losses in the House, which the GOP controls by a 234 to 201 margin.
In the Senate, Republicans need a net gain of six seats, and several state polls in the past month of contested races show that Democrats are in danger of losing control of the majority, and thus Congress.
If the Republicans do take control of both houses of Congress, will that fundamentally change the direction of the country?
I wish that I could believe that, but at this point most Republicans are virtually indistinguishable from most Democrats.
In other words, it is very hard to tell them apart.
As a nation, we are steamrolling toward a date with oblivion, but everyone is trying to put such a happy face on things.
Well, enjoy this time of relative stability while you can, because it is going to end way too soon.
Did you know that Family Dollar is closing 370 stores? When I learned of this, I was quite stunned. I knew that retailers that serve the middle class were really struggling right now, but I had no idea that things had gotten so bad for low end stores like Family Dollar. In the post-2008 era, dollar stores had generally been one of the few bright spots in the retail industry. As millions of Americans fell out of the middle class, they were looking to stretch their family budgets as far as possible, and dollar stores helped them do that. It would be great if we could say that the reason why Family Dollar is doing so poorly is because average Americans have more money now and have resumed shopping at retailers that target the middle class, but that is not happening. Rather, as you will see later in this article, things just continue to get even worse for Americans at the low end of the income scale.
Women’s clothing retailer Coldwater Creek Inc. on Friday filed for Chapter 11 bankruptcy after failing to find a buyer said it plans to close its stores by early summer.
Coldwater Creek joins other retailers to seek protection from creditors in recent months as consumers keep a lid on spending.
The company said it plans to wind down its operations over the coming months and begin going-out-of-business sales in early May, before the traditionally busy Mother’s Day weekend.
Coldwater Creek, which has 365 stores and employs about 6,000 people, has five stores in Maryland.
I remember browsing through a Coldwater Creek with my wife and mother-in-law just last year. At the time, my mother-in-law was excited about getting one of their catalogs. But now Coldwater Creek is going out of business, and all that will be left of that store is a big, ugly, empty space.
Of course the fact that a couple of major retailers are closing stores is nothing new. This kind of thing happens year after year.
But what we are witnessing right now is really quite startling. So many retailers are closing so many stores that it is being called a “retail apocalypse”. In a previous article entitled “This Is What Employment In America Really Looks Like…“, I detailed how major U.S. retailers have already announced the closing of thousands of stores so far this year. If the economy really was “getting better”, this should not be happening.
So why are so many stores closing?
Well, the truth is that it is because the middle class is dying. With each passing day, more Americans lose their place in the middle class and fall into poverty. The following is an excerpt from the story of one man that this has happened to. His recent piece in the Huffington Post was entitled “Next Friday, I’ll Be Living In My Car“…
For the past 13 years, I’ve mostly been doing facility management in several locations across the state. After the position turned into more of a sales role, they laid me off. Since then, I’ve been looking to find any type of work. I’ve applied for food stamps, and I’m waiting for that. I’m mostly eating soup from a food pantry.
I’ve been on several interviews — second, third, fourth interviews — and just haven’t been able to land a job for whatever reason. I definitely have the qualifications and the experience. Last week, I had a job offer that I thought was secure, and we were talking my work schedule. They decided to call me back and go with an assistant rather than a manager.
For a number of applications, I’ve dumbed down my resume. I don’t even go with a resume sometimes, just because I don’t want them to know that I’m educated and have a master’s degree. It shoots me in the foot. They don’t want me because they don’t think I’m going to stay. I don’t blame them. I was making six figures at $60-70 an hour. Now, I’m looking for a $10 an hour job.
There are millions upon millions of Americans that can identify with what that man is going through.
Once upon a time, they were living comfortable middle class lifestyles, but now they will take any jobs that they can get.
Just today I came across a statistic that shows the massive shift that is happening in this country. A decade ago, the number of women working outnumbered the number of women on food stamps by more than a 2 to 1 margin. But now the number of women on food stamps actually exceeds the number of women that have jobs.
How could things have changed so rapidly over the course of just one decade?
And sadly, things continue to go downhill. Every day in America, more good jobs are being sent out of the country or are being replaced by technology. I really like how James Altucher described this trend the other day…
Technology, outsourcing, a growing temp staffing industry, productivity efficiencies, have all replaced the middle class.
The working class. Most jobs that existed 20 years ago aren’t needed now. Maybe they never were needed. The entire first decade of this century was spent with CEOs in their Park Avenue clubs crying through their cigars, “how are we going to fire all this dead weight?”. 2008 finally gave them the chance. “It was the economy!” they said. The country has been out of a recession since 2009. Four years now. But the jobs have not come back. I asked many of these CEOs: did you just use that as an excuse to fire people, and they would wink and say, “let’s just leave it at that.”
I’m on the board of directors of a temp staffing company with one billion dollars in revenues. I can see it happening across every sector of the economy. Everyone is getting fired. Everyone is toilet paper now.
There is so little loyalty in corporate America these days. If you work for a major corporation, you could literally lose your job at any moment. And you can be sure that there is someone above you that is trying to figure out a way to accomplish the tasks that you currently perform much more cheaply and much more efficiently.
Most big corporations don’t care if you are personally successful or if you are able to take care of your family. What they want is to get as much out of you as possible for as little money as possible.
This is a big reason why 62 percent of all Americans make $20 or less an hour at this point.
As the middle class slowly dies, less people are able to afford to buy homes. Mortgage originations at major U.S. banks have fallen to a record low, and the percentage of Americans that live in “high-poverty neighborhoods” is rising rapidly…
An estimated 12.4 million Americans live in economically devastated neighborhoods, according to American Community Survey data collected from 2008 to 2012. That’s an 11 percent jump from the previous survey, conducted from 2007 to 2011. Even more startling, it’s a 72 percent increase in the population of high-poverty neighborhoods since the 2000 Census.
If nothing is done about the long-term trends that are slowly strangling the middle class to death, all of this will just be the beginning.
We will see millions more Americans lose their jobs, millions more Americans lose their homes and millions more Americans living in poverty.
The United States is being fundamentally transformed, and very few people are doing much of anything to stand in the way of this transformation. Decades of incredibly foolish decisions are starting to catch up with us, and unless something dramatic is done right away, all of these problems will soon get much, much worse.
If the U.S. economy is getting better, then why are major retail chains closing thousands of stores? If we truly are in an “economic recovery”, then why do sales figures continue to go down for large retailers all over the country? Without a doubt, the rise of Internet retailing giants such as Amazon.com have had a huge impact. Today, there are millions of Americans that actually prefer to shop online. Personally, when I published my novel I made it solely available on Amazon. But Internet shopping alone does not account for the great retail apocalypse that we are witnessing. In fact, some retail experts estimate that the Internet has accounted for only about 20 percent of the decline that we are seeing. Most of the rest of it can be accounted for by the slow, steady death of the middle class U.S. consumer. Median household income has declined for five years in a row, but all of our bills just keep going up. That means that the amount of disposable income that average Americans have continues to shrink, and that is really bad news for retailers.
And sadly, this is just the beginning. Retail experts are projecting that the pace of store closings will actually accelerate over the course of the next decade.
So as you read this list below, please take note that things will soon get even worse.
The following are 20 facts about the great U.S. retail apocalypse that will blow your mind…
#1 As you read this article, approximately a billion square feet of retail space is sitting vacant in the United States.
#17 A home appliance chain known as “American TV” in the Midwest is going to be shutting down all 11 stores.
#18 Even Wal-Mart is struggling right now. Just check out what one very prominent Wal-Mart executive recently admitted…
David Cheesewright, CEO of Walmart International was speaking at the same presentation, and he pointed out that Walmart would try to protect its market share in the US – where the company had just issued an earnings warning. But most of the growth would have to come from its units outside the US. I mean, via these share buybacks?
Alas, outside the US too, economies were limping along at best, and consumers were struggling and the operating environment was tough. “We’re seeing economies under stress pretty much everywhere we operate,” Cheesewright admitted.
Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America’s shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.
So is there any hope that things will turn around?
Well, if the U.S. economy started producing large numbers of good paying middle class jobs there would definitely be cause for optimism.
Unfortunately, that is just not happening.
On Friday, we were told that the U.S. economy added 175,000 jobs during the month of February.
That sounds pretty good until you realize that it takes almost that many jobs each month just to keep up with population growth.
And according to CNS News, the number of unemployed Americans actually grew faster than the number of employed Americans in February…
The number of unemployed individuals 16 years and over increased by 223,000 in February, according to the Bureau of Labor Statistics (BLS).
In February, there were 10,459,000 unemployed individuals age 16 and over, which was up 223,000 from January, when there were 10,236,000 unemployed individuals.
Meanwhile, the labor force participation rate continues to sit at a 35 year low, and a staggering 70 percent of all Americans not in the labor force are below the age of 55.
That is outrageous.
And things look particularly depressing when you look at the labor force participation rate for men by themselves.
The truth is that there simply are not enough jobs for everyone anymore.
The chart posted below shows how the percentage of working age Americans that actually have a job has changed since the turn of the millennium. As you can see, the employment-population ratio declined precipitously during the last recession, and it has stayed below 59 percent since late 2009…
If we were going to have a “recovery”, we should have had one by now.
Since there are not enough jobs, what is happening is that more highly educated workers are taking the jobs that were once occupied by less educated workers and bumping them out of the labor force entirely. The following is an excerpt from a recent Bloomberg article…
Recent college graduates are ending up in more low-wage and part-time positions as it’s become harder to find education-level appropriate jobs, according to a January study by the Federal Reserve Bank of New York.
The share of Americans ages 22 to 27 with at least a bachelor’s degree in jobs that don’t require that level of education was 44 percent in 2012, up from 34 percent in 2001, the study found.
Due to the fact that there are not enough middle class jobs to go around, the middle class has been steadily shrinking.
In 2008, 53 percent of all Americans considered themselves to be “middle class”. Today, only 44 percent of all Americans consider themselves to be “middle class”.
That is a pretty significant shift in just six years, don’t you think?
Despite what the politicians and the mainstream media are telling you, the truth is that something is fundamentally wrong with our economy.
On a gut level, most people realize this.
According to one recent survey, only 35 percent of all Americans say that they are better off financially than they were a year ago. And according to a recent NBC News/Wall Street Journal poll, only 28 percent of all Americans believe that this country is moving in the right direction.
The frightening thing is that this is about as good as things are going to get. The next great wave of the economic collapse is approaching, and when it strikes the plight of the middle class is going to get a whole lot worse.
If Americans will trample one another just to save a few dollars on a television, what will they do when society breaks down and the survival of their families is at stake? Once in a while an event comes along that gives us a peek into what life could be like when the thin veneer of civilization that we all take for granted is stripped away. For example, when Hurricane Sandy hit New York and New Jersey there was rampant looting and within days people were digging around in supermarket dumpsters looking for food. Sadly, “Black Friday” also gives us a look at how crazed the American people can be when given the opportunity. This year was no exception. Once again we saw large crowds of frenzied shoppers push, shove, scratch, claw, bite and trample one another just to save a few bucks on cheap foreign-made goods. And of course most retailers seem to be encouraging this type of behavior. Most of them actually want people frothing at the mouth and willing to fight one another to buy their goods. But is this kind of “me first” mentality really something that we want to foster as a society? If people are willing to riot to save money on a cell phone, what would they be willing to do to feed their families? Are the Black Friday riots a very small preview of the civil unrest that is coming when society eventually breaks down?
Once upon a time, Thanksgiving was not really a commercial holiday. It was a time to get together with family and friends, eat turkey and express thanks for the blessings that we have been given.
But in recent years Black Friday has started to become even a bigger event than Thanksgiving itself.
Millions of Americans have become convinced that it is fun to wait in long lines outside retail stores in freezing cold weather in the middle of the night to spend money that they do not have on things that they do not need.
And of course very, very few “Black Friday deals” are actually made in America. So these frenzied shoppers are actually killing American jobs and destroying the U.S. economy as well.
The absurdity of Black Friday was summed up very well recently in a statement that has already been retweeted on Twitter more than 1,000 times…
“Black Friday: because only in America people trample each other for sales exactly one day after being thankful for what they already have.”
It has gotten to the point where it is now expected that there will be mini-riots all over the country early on Black Friday morning each year. The following are a few examples of the craziness that we saw this year…
Fortunately, many Americans are starting to get fed up with Black Friday. In fact, one activist named Mark Dice actually went out and heckled Black Friday shoppers this year. I found the following You Tube video to be very funny, and I think most of you will too…
In the end, it is not that big of a deal that people want to fight with one another to save 50 dollars on a cell phone.
But this kind of extreme selfishness and desperation could become a massive problem someday if society breaks down and suddenly millions of extremely selfish and desperate people are scrambling for survival.
With each passing day our economy is getting even weaker, and the next wave of the economic collapse is rapidly approaching. What are people going to do when the next spike in unemployment hits us and nobody can find work?
To get an idea of where things are headed, just look at Europe. In both Greece and Spain the unemployment rate is over 25 percent and civil unrest has become almost a constant problem in both of those countries.
So what kind of riots will we see in the United States when the economy gets much worse than it is now?
Already there are signs of social decay all around us, and most Americans are completely unprepared for what will happen if a major disaster or emergency does strike.
Sadly, the reality is that most Americans live on a month to month basis. Most families do not have any emergency savings to speak of, and one recent poll found that 55 percent of all Americans only have enough food in their homes to survive for three days or less.
To me, that is an absolutely insane number.
We just came through a summer of extreme drought and global food supplies have dropped to a 40 year low. Our world is becoming increasingly unstable, and the global financial system could fall apart at any time. Most of us just assume that there will always be huge amounts of very cheap food available to us, but unfortunately that simply is not a safe assumption. The following is from a recent article in the Guardian…
Evan Fraser, author of Empires of Food and a geography lecturer at Guelph University in Ontario, Canada, says: “For six of the last 11 years the world has consumed more food than it has grown. We do not have any buffer and are running down reserves. Our stocks are very low and if we have a dry winter and a poor rice harvest we could see a major food crisis across the board.”
“Even if things do not boil over this year, by next summer we’ll have used up this buffer and consumers in the poorer parts of the world will once again be exposed to the effects of anything that hurts production.”
When I watch my fellow Americans trample one another to get a deal on a television or a video game, it makes me wonder what they would be willing to do if they went to the store someday and all the food was gone.
Desperate people do desperate things, and someday if there was a major economic breakdown in the United States I think the level of desperation in this country would be extremely frightening.
So what do you think? Please feel free to post a comment with your thoughts below…