The report presents little information that any citizen of average intelligence should be unable to surmise. The raw data simply quantify the collapse of consumer confidence.
With the exception of food and beverage, health, and the odd 'miscellaneous store retailer' category, sales have declined in all of the thirteen groupings of these sales figures tabulated by the U.S. Census. Americans are shopping less, eating, and increasingly seeking medication to ease the pain.
Falling oil prices, and the weakening of petroleum demand translated into a 12.7% reduction in gasoline station sales over the past month. The lessening burden of energy costs is the one saving grace of this report. Quietly, conspiracy theorists, agitated lawmakers, and misinformed economists have been dismissed by the march of time. The swift deterioration of oil prices from $150 to $60 per barrel, coupled with the world economy's inability to gain traction during this time frame shall serve as further proof that energy markets cannot be manipulated. High oil prices were never the sole factor in this global slowdown.
Energy policy will be put on the back burner by both parties. The G.O.P. calling card to 'drill, drill, drill,' will be challenged by environmentalists - lobbying against exposing the sensitive shores of Florida and permafrost terrain of Alaska to catastrophe with energy prices at these levels - and the left-wing theme of alternative energy will be dismissed as an impractical scheme of tree huggers. Solar energy, wind, and ethanol could not compete with oil prices at $150. Alternative energy investment is almost a pie-in-the sky non-issue with crude oil futures approaching $50.
Sorry, Mr. Pickens. Sorry, Mr. Gore.
Detroit is a wreck. Motor vehicle and parts dealer revenue fell by 5.5% in October, and automobile sales have been ravaged - to the tune of a 25% decrease in one year. General Motors stock is at $3 - levels not seen since 1946. GM shares held for sixty-two years have returned nothing. Ford stock has not fared much better - trading at an outrageous $1.80 per share, from 1999 levels at $35. Ford Motor Company, and GM are capitalized at $4.2 billion, and $1.8 billion, respectively. Private equity group, Cerberus Capital Management is allegedly looking to sell Chrysler to General Motors in some type of 'merger.'
Hence, let us value Chrysler at $1 billion. The market value of the Big Three automakers combined, is now a laughable $7 billion. For the purposes of comparison, ExxonMobil boasts a market capitalization of $375 billion. Also, Warren Buffet's net worth was calculated at $62 billion, as of March 2008. According to Forbes, 132 individuals on the planet Earth boast net worths equal to, or greater than $7 billion. Any one of these 132 moguls could very well purchase the entire output of the U.S. auto industry at this very moment.
There are no takers.
With gargantuan unfunded, pension liabilities, lousy product lines, impaired access to credit, and a combative United Auto Worker's union, the intrinsic value of Detroit is actually - zero. Taxpayers will be responsible for this disaster. The solvency of The Big Three is a matter of national pride, and the ripple effect of Detroit's failure in the Upper Midwest would be apocalyptic to an already defeated Rust Belt.
Lastly, the furniture and home furnishings category details a 13.5% annual decrease in sales, proving that the housing industry remains in shambles. Although the National Association of Realtor's Housing Affordability Index numbers appear favorable - the housing bust is far from over. Credit has tightened, real property is plagued by oversupply, and job losses are mounting. These happenings will skew the algorithm which assumes a median income family may be able to purchase a median-priced home - with a 20% down payment.
Things could not get much worse.
Solution: Buy [almost] Everything.
22 comments:
I was actually going to ask you to write about this!! We are more alike than I thought, lol. I believe that alot ot people working in retail are either going to be laid off or their hours drastically cut.
We will see what this Holiday season looks like.
It may not be pretty. I doubt there will be much seasonal hiring.
Having talked to my former employer at good ole VS, no, there wont be much seasonal hiring. Conversion is the same across Limited Brands but total numbers and average dollar sales have dropped significantly.
At the risk of sounding pollyanna, I think it's a good thing that people aren't buying stuff. We're maxed out on credit and going to the stores and buying more junk won't help matters. To get on the road to recovery, we'll have to some belt-tightening and cut down on the spending. If that leads to a deeper recession, so be it. It's gonna happen
Kofi,
I wish I could agree that things can't get much worse. They will.
Though it is good that fuel prices are low at the moment, they're down for the wrong reasons.
Production (demand) is down across the board. Speculators are taking Pres. Elect Obama's word for it when he say's he's going to raise taxes on those making more than $250,000 a year. They know the inevitable results of that and they are predicting demand for fuel will hit record lows due to massive lay-offs and rock bottom GDP.
Again, I hope I'm wrong.
Thanks for checkin' out my blog again, I responded to your comments there.
I meant that the stock market is cheap, and now is a good time to invest for the long term.
Also, for those that are looking to go shopping - now is a good time. Everything is for sale.
Of course, if one is maxed-out and struggling; I would not recommend spending money on anything outside of the bare essentials.
If you go through my old archives, you will see that I am a bit of a contrarian. I have urged prudence at every turn. Outside of this blog, I was advising that people shut down spending and brace for a collapse years ago.
For me to be advising that people begin to loosen up, spend, and invest aggressively [if you have the money and time to do so] is a complete 180.
Roadhouse,
The retail sector will take its lumps - and there will be job losses and bankruptcies.
But, I don't think things could unravel much further.
A lot of companies that were on the brink, have already went bust, or are under government receivership.
We already know where the flash points are - and there really isn't much left to destroy, unless you really think we are on the road to living in grass huts.
Kofi, I wasn't contradicting your investment advice. I was just adding my two cents on the retail sector. Truth is, a lot of people (the middle class) don't have the money to keep on spending. I understand that some aren't bothered by the economic downturn and they'll keep buying. God bless 'em.
Cool. I agree.
Computer talk can be difficult to decipher, sometimes.
Thanks for inviting me to visit your spot...
Go b.
Kofi said: "But, I don't think things could unravel much further."
Kofi,
I hope you're right, but Looking at the big picture tells me that we are in for a very rough ride in the next few years.
If only half of Obama's proposals come to fruition, companies will not be able to keep their doors open.
You can see it already. Banks are not going to loan money to people who they predict will be layed-off in the next year or so. They are not going to lend money to companies that they predict will be haveing trouble keeping up with Obama's tax increases. People are not going to rush out and borrow under the assumption that they will be layed-off soon and be pating higher taxes as well.
I am a good axample. I need to build an addition to our house to accomodate our new baby. But I'm not going to take on new loan when I know that my property taxes are going to go up. Plus, I know that I am risk of losing my job next year after Obama raises my boss's tax burden. My bank already knows this and are in no hurry to lend to anyone right now.
This is why those of us who voted against Obama just couldn't get on his band wagon.
We have a long ways yet to fall.
I, for one, will pray more often and buy more AK 47s and shotguns, as these hard times call for.
i knew something was wrong when i saw christmas decorations up at the beginning of october in some places. it doesn't take a rocket scientist to figure out they were hoping the decorations would trigger folk into buying. it reeked of desperation though.
on the plus side, i don't shop much. in fact, folk tend to either get homemade gifts from me or they get a gift after christmas so i can make the sales. this year, with the price cuts, my folk might actually see a store bought gift from me on christmas day. a miracle to be sure.
For years, Christmas decorations have been going up on Nov. 1, right after Halloween, in many retail stores. In fact, Halloween and Christmas decorations are taken down and put up on the same day. There's no lag time. Only former mall rats know this.
All this talk about the sad state of retail...what happens to the poor folk that couldn't afford the buy even if the economy was on the upswing? I never hear folks talk about the poverty-stricken. It's like they're the walking dead...
Roadhouse - You speak as if we are headed for Hooverville type shantytowns and breadlines.
Draven7 - Yes, I do think crime will go up, but being a vigilante isn't always the answer - lol.
And Christmas has been creeping up earlier and earlier. Retailers are falling all over themselves to pack in sales.
Kee,
That is the way the world turns.
Have you read Machiavelli?
To paraphrase:
Leaders ignore the poor because they are too weak to do anything about their mistreatment, anyway. Leaders focus on coddling the nobility that may emerge as competition and the middling masses, which have power in numbers.
(I could never be a politician)
Kofi, I wasn't alluding to anything about vigilantes. Wow, I thought the joke was obvious. Remember when Obama said people cling to guns and religion in troubled times. Re-read my post and put it into that context. Yikes! Some people get it, some don't. Peace always
Oh, man, you got me, Kofi. You just flipped it around and made another joke. I get it now. You'll have to excuse me, I can be a little slow sometimes.
Ha Ha.
I was just messing with you, #7.
The sales of guns and booze is about to skyrocket!
I know. Malt liquor and shotguns don't mix. I don't know whether to buy a bulletproof vest or some firepower for myself. I'll wait and see.
Depending on where you are at, you may consider purchasing a few grenades, a rocket launcher, and about five rolls of yarn.
Do not ask me what the yarn is for.
Just think:
What would McGuyver do?
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