Retail Sales in U.S. Decrease to End Weakest Year Since 2009

[Alan C.]

Retail Sales in U.S. Decrease to End Weakest Year Since 2009

 

I like how the columnist suggested that it's probably because people are choosing to sock away savings from cheaper gas prices rather than go shopping. I don't think so.

 

Wal-Mart to shutter 269 stores, 154 of them in the US

 

Sears and JC Penney have also closed stores. Sears used to be a department store juggernaut in the U.S.

 

This must be the strong economy that Obama talked about in his State of the Union address.

 

I think we're right about where we were in 2006 when things began to slow down right before the housing crash. However, this time the housing bubble won't be the only bubble that pops.

[Steve Winder]

Layoffs are going to explode higher, defaults in auto loans and oil lending will move higher, home prices will correct down and this phony 'recovery' will be exposed as nothing more than money printing by the FED.

[Thomasio]

What can you expect?

At least on this point I'm a fan of Peter Schiff, who points out pretty clear where the problems are.

Well paid manufacturing jobs are replaced by low paid service jobs, a growing amount of people in the middle class has maxed out their credit limits, many are falling down below the poverty line and everybody has understood, taking on ever more debt isn't a good idea.

 

So what do you get as a result?

Consumers use every penny they can save, such as falling gas prices, not for additional shopping, but to pay off debt and if then they still have something left, they save it, for their children, for pensions, etc.

Logic consequence is, a growing productivity that produces ever more stuff with ever less workforce cannot find buyers, which leads to falling prices and no incentive for investment, just the opposite, factories are closing and workers are laid off.

 

What Obama, or better nearly the whole world is trying to do is, pump money into the economy to make businesses invest, but how could that possibly lead to anything else than gigantic bubbles in the stock market and real estate?

After all the problem isn't on the offer side, the problem is on the demand side.

More and more people cannot buy anything and the few who still can don't want to.

You just can't create demand through expanding the offer, or better if you create jobs that expand the offer, the amount of extra demand created through this is always less than the expansion in offer.

In such a setting every halfway intelligent CEO can predict falling prices and will decide not to invest.

Building additional shopping malls won't change that and the well paid manufacturing jobs that could make a difference are by now all in China.

Enforcing a higher minimum wage won't make a difference either, because in order to get anything out of that, one has to have a job and those are disappearing.

 

I believe we will soon see "helicopter money", where the state prints even more money than they did in the past, where they hand out extra money not only in form of loans to businesses, but in form of free money for everyone, but other than adding runaway inflation to the existing problems, it won't change anything either.

 

A solution?

I can't think of one, not within the system of fiat money and authoritarian government we currently have.