“A lot of them are gone for good. The age of the U.S. and world economy being driven by the U.S. consumer may be in the past. We need to become more of a nation of producers rather than a nation of consumers.”

- Nigel Gault, chief U.S. economist for IHS Global Insight

>

>

Rex Nutting points out that the huge job losses recorded by BLS are not evenly distributed. This recession has hit the retailers particularly hard:

“Recessions aren’t equal-opportunity unemployers. Usually, the pain of job loss is felt most acutely among factory workers, while the vastly larger number of people who work in services, such as banking, retail or health care, are much more likely to retain their jobs.

But this recession is showing America something new: For the first time ever, more private-sector services jobs have been lost than goods-producing jobs have been lost. Since the recession began in December 2007, 1.94 million service jobs have been eliminated compared to 1.80 million in manufacturing, construction and mining.

Many of those lost jobs were in retailing, which has seen its largest job losses since the data collection began in 1939. Through January, 570,000 retailing jobs were gone, representing a record 3.6% of retail jobs. Retail companies have stepped up the pace of layoffs since the horrible holiday sales season ended. More than 50,000 job cuts have been announced since Jan. 1 by major retailers such as Circuit City, Home Depot, and Macy’s. On Thursday, the chains reported that sales were weak again in January, results that are likely to prompt even more layoffs.

Some economists say many of those jobs will never come back as Americans wean themselves from the easy credit that’s fueled their consumption for the past 25 years.”

>

If the US consumer is no longer the engine driving global economic growth, what will replace them? Can China or India become mad gadget loving consumerists?  Or, are we on the path to a much slower growing global economy — at least for the foreseeable future?

>

>

Source:
Biggest job loss ever for retail sector
Rex Nutting
MarketWatch, 12:42 p.m. EST Feb. 6, 2009

http://tinyurl.com/WillRetailEverRecover

Category: Consumer Spending, Economy, Markets, Retail

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “Will Retailing Ever Fully Recover ?”

  1. ottovbvs says:

    Can China or India become mad gadget loving consumerists?

    BR: Have you ever been to China or India? They are already gadget loving consumerists. In globalization and consumerism terms the current problems are a speed bump for them. A big one but a speed bump nevertheless. As for this country it’s clearly going to be a few years before retail volumes recover to the levels of 2006/7 but ultimately it’s going to happen driven by demographics alone. The populationof this countryis going to be at least 25% larger by 2050, that’s another 75 million consumers.

  2. Bruce in Tn says:

    Barry,

    “Rex Nutting points out that the huge job losses recorded by BLS are not evenly distributed”

    Ok, I get that..tell me how any of us can make sense of some of these reports..e.g. :

    http://www.bloomberg.com/apps/news?pid=20601082&sid=a8ACRE36dJwg&refer=canada

    Canada’s Employers Cut Record 129,000 Jobs in January

    20k job cuts in December and 130k job cuts in January? I mean really? 650% more cuts in one month?

    No, many of the job cuts in retail will never return. Perhaps they could start over in investment banking?

    ~~~

    BR: Are the January cuts seasonal ?

  3. yodalayhoo says:

    otto, it’s a matter of scale. chinese, indians, and the rest of the dev world need their 3 oz cell phones for cultural status (replacing indoor toilets), but third-worlders haven’t yet shown the willingness to dive into debt for an iphone or lcd TVs for the kitchen.

  4. dead hobo says:

    BR Asked

    Will retailing ever fully recover?

    reply:

    Nope, sorry. It’s going to rain. Today is bad and tomorrow will be even worse. It will suck forever. Nada. Pretty soon they’ll be laying off at Goodwill. Woe is me. Enjoy today because tomorrow will be terrible. God it hurts and it’s never going to stop.

  5. danm says:

    20k job cuts in December and 130k job cuts in January? I mean really? 650% more cuts in one month?

    ———-
    2 months ago, our leaders were telling us that it’s different here in Canada
    1 month ago, our leaders were telling us that we would not have deficits
    Today: they are coming out with a stimulus cheque for everyone and everything.

    Can’t compare Canada to US. Canada’s currency tanked to 63 cents a few years ago and when that happened, Canada kind of became a little China in terms of amanufacturing.

    Because of the low currency, most Cdn firms switched to the US market, focused on selling to the US. Now that the US is not buying anymore, Canada is starting to feel the pain very quickly…

    manufacturing (because of 63 cent dollar, a lot of manufacturing was done in Canada)
    forest products (less houses being built)
    car industry (less cars being produced)
    oil industry (companies cutting budgets becuase of huge drop in oil price)
    commodities (same as oil)

    I’m expecting cuts in financials (banks are still holding up vs. US banks but real estate starting to go down here so banks will start getting hurt).

    And because we are maybe 1 year behind in our slowdown, consumers are still spending their real estate gains. But since real estate gains are quickly evaporating (Vancouver, Toronto…) I expect retail to start suffering very soon.

    Not pretty.

  6. jm says:

    ottovbvs wrote, “The populationof this countryis going to be at least 25% larger by 2050, that’s another 75 million consumers.”

    But the last time we had the kind of situation we have now was the time when the tight immigration restrictions of the mid-20th Century were enacted. And it is quite likely that a side effect of the end of easy credit will be further declines in the birth rate of citizens.

    A few years ago when I checked the Census stats for the Chicago metro area I found that essentially all population growth there was due to immigration.

    Since the birth rate among immigrants is high, and this seems to be especially so among the illegal immigrants most likely to be excluded in the future, the pressures against immigration that are certain to rise as we sink deeper into depression will end population growth in the US, and probably send the trend negative.

  7. wally says:

    Producers?

    Of what? For whom? Not such an easy answer… all the junk we need is pretty much produced now and we don’t need to produce more. I hear this ‘we have to produce’ meme a lot… and I think it is incorrect.
    We have to learn to NOT produce but still support society. One of the keys to this is the social safety net and another is addressing the obscene differential between filthy rich and utterly poor that is what the US has now become. The people who have to start pulling their weight are the wealthiest ones in spite of their snobbery about those who are less well off. By accumulating what they have, they are depriving others of a decent life.

  8. investorinpa says:

    New retail and restaurants always pop up and survive recessions. Its been said all successful restaurants got their start during an economic downturn. I have no doubt that 10 years from now, many of today’s leaders will be replaced. When I was a kid, Montgomery Ward and Sears were dominant…later, Ames, Bradlees, Kmart…then Walmart and Target and Kohls. Down the road, who knows? Same thing with restaurants. When I was a kid, we used to go to pizza hut all the time. Now they only deliver in most parts. Places like Olive Garden and Cheesecake factory are the destination of choice. My guess is that we’ll soon (in 5 years) see new restaurant chains, retail chains, and a new music sound that comes out of this “Deprecession”…and yes Barry, you can use my terminology for this market!

  9. KJ Foehr says:

    We need to kill the twin gods of consumerism and materialism. And we need to beat our addiction to ever more GDP growth and ever more profit: each hit soon leads to the need for more and bigger hits, and the joy of life is lost in the pursuit.

    Will retailing ever fully recover? Let’s hope not.

    The best things in life aren’t for sale at Macy’s.

  10. willid3 says:

    I doubt seriously that China or India will be able to replace the US consumer as the engine for growth. Its not their cultural outlook. which of course means that they will be in more pan than we are. far longer than we are. might even have a few civil wars too. the down side of all of that is what to do with all the people? as the economy shrinks, we will have even more problems.

  11. a guy called john says:

    Have you ever been to China or India? They are already gadget loving consumerists.

    But do they pay remotely close to the same price for the same gadget as Japanese, Europeans or Americans do?

  12. Steve Barry says:

    Retailing, hopefully, will never recover to ridiculous heights. A better question is “what would be a healthy level to which retailing will eventually recover?”

  13. Marcus Aurelius says:

    “The populationof this countryis going to be at least 25% larger by 2050, that’s another 75 million consumers.”
    __________

    Sounds like a home builder client of mine, here in the mid-Atlantic region:

    “This area will 20,000 jobs a year for the next 20 years.”

    This statement was used to justify the decision to continue to build $350K, entry level condos that, at that time, were being sold primarily to investors using no-doc and similar loans.

    When I countered that those jobs would pay an average of $50K yearly, he got a blank look on his face and tried to explain how appreciation would keep the ball rolling.

    Bangladesh has 145 million+- “consumers” with a per capita income of roughly $1,400/yr.

    Not exactly Abercrombie & Fitch territory.

  14. 10 cc says:

    Citizens of any nation will probably become “mad, gadget loving consumerists” – if they can afford it. If the Chinese and Indians have been going that route in recent years, it is primarily due to incoming cash flows generated from US consumerism. So if the US dries up, the consumerist movements over there bog down as well. How the “decoupling” theory ever gained any traction in such an unbalanced global economy, I’ll never know. And if they do attempt to become more domestic-focused economies, it may well have to come at the expense of the advantages they’ve created for themselves as export or outsourcing driven economies. So they face some difficult decisions.

  15. donna says:

    I still have things I would like to consume.

    Lovely, hand-made things, crafted carefully and well by people who know how, instead of crap made in China in huge factories where a city of a hundred thousand people produces nothing but socks.

    Do you have any idea how difficult it is in this country to find a decent pair of socks at a reasonable price that are think and fluffy and comfortable as all get out? I’m so sick of thin, colorful, wear out in a month socks, I truly am. But I hate paying 12 to 14 dollars for a really nice pair of socks.

    This is the kind of ridiculous garbage we have in a society where the lowest common denominator has taken over all our retail stores. For those like me, who could afford to buy even now but aren’t — we don’t buy anything not because we can’t — we’re not buying it because it is crap, and we want something better.

  16. donna says:

    And just don’t get me started on rayon — good grief.

  17. Cybernaught says:

    “Have you ever been to China or India? They are already gadget loving consumerists.”

    “But do they pay remotely close to the same price for the same gadget as Japanese, Europeans or Americans do?”

    Don’t know much about India, but a lot about China. They LOVE gadgets and they pay about the same for them as we do in the US (in absolute terms – in relative terms, much more). They pay a LOT less for the services. Phones are 5-10% less, but service is 1000% less. The true luxury items in China are washers and dryers.

  18. mark mchugh says:

    Q. If the US consumer is no longer the engine driving global economic growth, what will replace them?

    A. The same thing that’s always driven economies when things get bad……..War.

  19. Cybernaught says:

    War does seem to be the one circumstance that gives the political will to do what must be done. Witness the length of the debate over the Patriot Act, funding Iraq etc.

    The other circumstance is civil insurrection – another version of war. Even the threat of it galvanizes those who have the most to lose. Witness the length of the debate over TARP.

    Just something to ponder.

  20. The Woodsman says:

    Donna, Thanks for your comments. We are a wholesale/manufacturer of handmade goods. We sell to retailers all over the country, although these are “interesting” times for people in our space. Thankfully, we run a lean company with no debt and will survive to thrive once we have a recovery. I just returned from a trade show and was amazed to hear how many people I spoke with are unconcerned about what is happening in Washington. Most still believe the
    politicians will save the day.

  21. Mark W says:

    Retail is hurting because of the pervasive trend of every retail operator who gets a taste of sucess to leverage themselves to the hilt and open up 350 stores across the country within 4 years. The discarding of the old growth by osmosis and off of earnings rather than huge lines of credit made them all prone to total destruction in a downturn. If you can’t weather a downturn because of looming interest payments that exceed your basic capital requirements, then you deserve to be toast. My $.02

  22. xnycpdx says:

    BR said:”Or, are we on the path to a much slower growing global economy…”

    yes, if by ‘slower’ you mean rapidly, and by ‘growing’ you mean collapsing.

    i’d like to think we’d get back to the production of well-made products that cost a little more but sell well, (see donna above) but that requires capital for the manufacturer and a JOB for the consumer. both seem to be in short supply.

    thanks to the ineptness of president barack One-term, who has handed the republicans the momentum on this (and ignored all opinions from outside his bubble), i see the US doing nothing that will stop the collapse of our economy.

    whether it be someone high-profile like krugman, or the little moles toiling away down here in the comments, the people who seem to see the real dangers are brushed aside – apart from a few media soundbites, quickly glossed over, of course.

    i fear the country’s two options at this point are massive social collapse (hopefully with an iceland/argentina-style revolt), or a pretty fireworks show involving missiles to distract us.

    mr. obama kept telling us he was fdr, mlk and abe lincoln all in one pretty package; let’s hope he hears their ghosts screaming at him in the night, and DOES something besides appease the american taliban … their term, by the way.

  23. VennData says:

    The only retailer(s) who’re really working is the legalized pot distribution in California (Go Ah’nold.)

    Legalizes it. If the Supply Siders are right about taxes, than if you tax it, the usage will drop precipitously, right? And we’ll have fewer prisons, less money needed for law enforcement and like Holland, less hard drug usage.

    Milton Friedman on legalizing weed.

    “…I see America with half the number of prisons, half the number of prisoners, ten thousand fewer homicides a year, inner cities in which there’s a chance for these poor people to live without being afraid for their lives, citizens who might be respectable who are now addicts not being subject to becoming criminals in order to get their drug, being able to get drugs for which they’re sure of the quality. You know, the same thing happened under prohibition of alcohol as is happening now…”

    http://weblogs.baltimoresun.com/business/hancock/blog/2007/11/milton_friedman_on_legalizing.html

    Willliam F. Buckley: The “Drug War” is lost.

    http://www.nationalreview.com/12feb96/drug.html
    http://www.nationalreview.com/buckley/buckley200406291207.asp

    Do I need to mention the greatest American athlete of this century so far, Michael Phelps?

    Pay down the debt on the back of the stoners. I’m all for it.

    Coming soon to a vacant mini mall near you.

  24. ottovbvs says:

    yodalayhoo Says:

    February 8th, 2009 at 9:28 am
    otto, it’s a matter of scale. chinese, indians, and the rest of the dev world need their 3 oz cell phones for cultural status (replacing indoor toilets), but third-worlders haven’t yet shown the willingness to dive into debt for an iphone or lcd TVs for the kitchen.

    ….it’s only a matter of time. Not that how they pay for it was mentioned by BR or myself. China and India are going to become fully fledged consumer societies. I would have thought that was so obvious as to hardly require stating.

    jm Says:

    February 8th, 2009 at 10:33 am
    the pressures against immigration that are certain to rise as we sink deeper into depression will end population growth in the US, and probably send the trend negative.

    ….In short… nonsense. The official forecast is for about 25% pop growth in the next 50 years. Even on the narrow immigration issue I think you are wrong. If over the next four years as is highly likely some sort of immigration reform is passed you’re effectively immediately adding 10 million + illegals to our population, nor do I see any real effort to curb immigration. Don’t complain, it’s one of the pluses in our effort to stay at the top of the global heap. It’s not as if we don’t have plenty of space.

  25. Gabriel says:

    @ 10 cc Says:
    February 8th, 2009 at 12:11 pm
    … If the Chinese and Indians have been going that route in recent years, it is primarily due to incoming cash flows generated from US consumerism …

    There we go again. I would recommend this analogy from Peter Schiff:
    Peter Schiff’s Island Analogy

    @ yodalayhoo Says:
    February 8th, 2009 at 9:28 am
    … third-worlders haven’t yet shown the willingness to dive into debt for an iphone or lcd TVs for the kitchen …

    That’s just so amazing and amusing: “willingness to dive into debt for an iphone or lcd TV”! That’s the problem with this country. People still have no idea what hit them! Or, maybe some of them haven’t been hit hard enough yet. Oh well … the march is on … As Schiff says, the fireworks have just started. So, thanks to Bernanke, the glory days are soon to be upon us and many will be humbled in the process. :evil:

  26. TheReformedBroker says:

    missing in this question of whether or not the retailers will survive is the question of whether or not anyone will care?

    make a list of the retailers that are on life support right now and ask yourself whether or not it will matter or if people will even notice when they finally die.

    Rite-Aid? Please. Pier 1? Are you kidding me? They just don’t deserve to live anymore, end of story.

    if the Woolworth’s Five and Dime chain was extinctable (just made that word up) aren’t they all?

  27. wunsacon says:

    I see there’s not a lot of love for consumerism, Walmart, China, and such. Here are a few thoughts in defense of the accused:

    - I love consumerism and a service economy, within reason. I don’t think I’m going to live a richer, better life by sitting on the porch with my neighbors and talking about how awful it was to be employed in that lousy consumerist economy yet wondering how we’re going to get our next meal. If you think there’s overcapacity in everything, well there’s also overcapacity in labor. If we don’t want to engage in a lot of “meaningless” commerce, then I’m not sure where half the human population is going to get its next meal.
    - Most Americans (or citizens of any country) aren’t going to become cloning scientists or smart grid engineers. It’s not going to happen.
    - As a matter of fact, I *do* want 4000 shows on cable every week, because while I hate 3999 of them eventually a show like the Colbert Report comes along and seems to hit my funny bone just right.
    - I love Walmart, and cheap plastic products and leather goods made in China. I love economies of scale. I love globalization. These things have helped many people live more comfortable lives. $4 prescription Zocor sounds good to me. And without my LCD TV and treadmill from Walmart, I’d be FTE (fatter than ever).

    Are there problems with all these things? Yes. But, we could’ve done other things to ameliorate them. We neglected to adjust elsewhere or to maintain reasonable regulations and a social safety net.
    - We should’ve imposed import tariffs in proportion to the level of foreign compliance with our enviro standards. Without that, globalization has become a formula for: “take our jobs and pollute your side of the planet” (as though it won’t affect us eventually).
    - We should’ve imposed tariffs on China for pegging its currency, tariffs proportional to the difference between the producer price index in both countries. That would’ve slowed down the rate of globalization in a way it would’ve remained manageable.
    - Since the days of lifetime employment are long gone, employer-provided healthcare makes no sense anymore.
    - The top 1% are earning much more than their predecessors of last generation, not because they’re any smarter or harder working but because they benefit more from the gains of technology and globalization. Now more than ever, highly progressive taxation would re-introduce some fairness.
    - Increasing taxes doesn’t mean big government has to micromanage the spending. We can use voucher programs.

  28. wunsacon says:

    Totally agree, VennData…

  29. bcasey says:

    The neet thing about this depression is that all the really messed up things about our lifestyle are actually getting addressed. If I was some kind of seer the signs would be clear. We don’t need the retailers, nor the bankers, nor the Wall street vultures, nor New York city for that matter. We don’t need rollover SUV’s nor pickup trucks with empty beds. We don’t need to buy more oil to pollute our atmosphere. We don’t need McMansions out in the middle of Nowhere, nor in an historic neighborhood, our citys maybe won’t be so crowded that you can’t grow a few vegatables in your yard.

    I suspect the retail jobs will not come back and some malls are going to close and some Towns will regain their hearts. Some subdivisions will fail, some business PhD’s will likely have to go back to school. Lets hope they study something useful this time. But NYC is going down.

  30. 10 cc says:

    Gabriel,

    Not sure what your point is. If you and your buddy Schiff (who really blew it with his decoupling call by the way) are saying that ultimately “the Asians would be better off without us”, I don’t really disagree. But in the here and now, the fact remains that when things went bad here, they went bad there. And at present, whatever their reason, it seems that they are still just as desparate to maintain the status quo as we are.

  31. JohnDoe says:

    It depends on the type of retailing we talk about. Big ticket electronic items may take longer to recover but clothing retailers won’t go anywhere. Every year children will get their way and get new clothes for the school year. Nothing can stop kids from outgrowing their old clothes. These retailers will rebound much quicker than the rest and they are on sale right now.

  32. spigzone says:

    “? Or, are we on the path to a much slower growing global economy — at least for the foreseeable future?”

    The IEA (International Energy Agency) verified fact that the 800 largest conventional oil producing fields in the world are currently declining at a rate of 6% annually, and that rate will be steadily increasing says that the global economy will be SHRINKING – at least for the foreseeable future.

    By the way that 6%/800 largest fields figure came from a very deep very thorough study by the IEA upon being so directed by the Western Industrialized Countries, who set up and fund it, following the cattle prod to the political anus spike of oil prices into the stratosphere.

    Check this Feb. 4 article on the Arabian Business dot com website headed “Oil output could fall by 30m bpd by 2015 – Merrill (Lynch)”

    http://www.arabianbusiness.com/545723-oil-output-could-fall-by-30m-bpd-by-2015—merrill

    Explain how the world economy is not going to shrink as the world oil supply plummets.

  33. The main problem in the US is most of the consumers are stuck paying a 5% – 15% ‘tribute’ to the banking system from all the money that was borrowed. Work those people off their borrowings and they will consume again.

    China and India will consume but I’ll bet it will be in goods that make them more efficient. Washers, dryers, dishwashers and motorized vehicles will probably be the biggest items because those things will allow the Chinese household to become more efficient, save time and thus be able to work more hours and spend more time with the family. I see them being in the same place America was in the early ’40′s and ’50′s. Modernizing those economies will make them much more efficient and wealthy which will lift us all out of this slump together.

    It is not just China and India either. There will be many areas on the earth that begin to modernize their societies. That is one reason why cell phones have taken off. Communication fuels commerce not just socialization. These things all synergize towards higher standards of living. I think America’s biggest problem is that it is so wealthy that it forgot how to compete and globalization is starting to kick its tail. It will be a painful and hopefully quick adjustment but an adjustment just the same

    There is also a demographic shift that is throwing a wrench into the equation. These things will be difficult, but not impossible, to overcome

  34. Fladude says:

    It does not make any difference if China becomes a consumer economy. Will it ever happen? I think it will to an extent. The Chinese government will not let the Chinese public get into the kind of self destructive debt that destroyed the United States. But they will buy LCD screens and such. But how will this effect us? So the Chinese buy more Chinese made products. This won”t create jobs in the US. This won’t help retail in the US. The Chinese don’t buy our products. We don’t make anything anymore.

    Immigration isn’t going to save us either. A bunch of illegals from Mexico aren’t going to turn the US around. They will just make the US more like Mexico.