"In the Tank Forever": U.S. Consumers, Retailers in a "Death Spiral," Davidowitz Says

[jakeXT]

Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.

Rather than summarize, let me just highlight some of his best one-liners:

On retail:
"The retail business is terrible... It's almost all negative."
"We're going to close hundreds of thousands of stores."

On the consumer:
"They’re still over leveraged, they're losing jobs, their credit has been cut back."

On America:
"We are in the tank forever. As a country we are out of control, we're in a death spiral."

On the stock market:
"We're in terrible shape. That's what the fundamentals tell me. I can't explain the stock market."

....

http://finance.yahoo.com/tech-ticker/article/312114/%25E2%2580%259CIn-the-Tank-Forever (video at link)

[Teaser]

1. ridiculous

and against all the available evidence.

[nebenaube]

2. Nice to hear...

Can you back it up with some links?

[MercutioATC]

3. I'm torn on Davidowitz.

He's an anti-union, corporate shill...but I agree with a lot of what he says about the fundamentals.

He says that Americans spent years spending more than they made, and that's unsustainable.

He says that people have finally become scared, and have begun saving...and that this hurts retail sales of luxury goods.

He says that there will be repercussions for the actions of the Treasury and the Fed.

Until he starts ranting about how GM let itself be taken advantage of by organized labor, I'm pretty much on his frequency.

[truedelphi]

8. I happened to walk through an area that is

Sort of a local small industrial park area.

Last year at this time, the welder still had customers in his driveway.

Last year, the landscaping agency had one car, the manager's, in the driveway. (The actual workers were out in the field.)
THE AUTO MCECHANIC WAS WORKING ON CARS AND HE HAD TWO HELPERS.

Yesterday, this vital component of local jobs was dead, dead and dead. The welder's was completely shut up, and from the look of the cobwebs over the garage doors, it hasn't been open in a while.

The landscapers was having a meeting, and many cars in the driveway. The auto mechanic shop and work area was deserted.

On my way to this area, I walked by a local realtor's, and the WHOLE BUSINESS is up for sale.

Yet Wall Street thinks we consumers are gonna go on some spending spree?

[madrchsod]

4. bring out the dead ! bring out the dead!

well i guess it`s over folks... we`ll never ever buy another thing and america is dead. oh what ever shall we do?...what ever shall we do?

[Berry Cool]

5. Yeah...I mean, "in the tank forever"???

Nothing is forever. Talk about gloom and doom.

Doesn't mean things aren't still bad, but boy, is this guy a Debbie Downer. What's needed is a realistic and useful view of what's going on--not one that says "We're all gonna DIIIIIIIE."

[tama]

10. What shall you do?

It's quite obvious, everything else except what you should do... :)

Well not really, many are learning gardening. That's the best thing to do.

[AdHocSolver]

6. The MAIN problem with the U.S. economy is offshoring of jobs and the importing of almost everything.

This practice has created an enormous trade deficit, and this country's borrowing to maintain a high level of consumption is unsustainable. Our creditors, all of the foreign countries buying our debt, are already looking to drop the U.S. currency as the international monetary standard.

The only solution is to replace the current corporate cartel trade agreements such as NAFTA, the WTO, the IMF, and the World Bank, with trade agreements that provide a level playing field to companies that want to produce goods and services within the U.S. using American workers. At the same time, we have to rewrite the tax laws so corporations can't set up overseas tax havens to avoid paying their fair share.

This country has to reregulate the financial institutions by reimplementing New Deal laws such as the Glass-Steagall Act.

This country has to replace the Federal Reserve which is nothing more than a cartel of private banks that manipulates the money supply for their own profit, and which enabled the stock market and real estate Ponzi schemes that has decimated middle class savings.

The cause of our economic problems is plain to see, and the solution is equally straightforward. Just because nobody has suggested a way to get our weak and/or corrupt government officials to implement the necessary solutions, is no excuse for people to maintain that no one knows what to do.

The commentator in the OP is correct about the economy going down a rathole. He is wrong that there is no explanation and no solution. The short paragraphs in the current post explain it all. Anybody who gives a more complex explanation is scamming you. If they throw in a complex graph, run like hell.

[fasttense]

7. Bingo, you hit the nail on the head. n/t

[truedelphi]

9. Every economic principle you are mentioning

Was widely understood by the colonists who knew that local job creation and protection was paramount. And they had less than eighth grade educations.

And the economic principles you mention were widely understood by the Depression era citizenry, and they had tenth grade educations.

Now we have these MBA's from Harvard and Yale and they have spent two or three decades teaching each other that Supply Side economics is the name of the game. And that you can create money out of thin air and let the Fed buy up the bonds that the Treasury is selling and it will all somehow work out.

Except Supply Side wasn't able to keep the economy going, and Bernanke and Geithner's games won't either.

[ixion]

11. on the consumer

"They’re still over leveraged, they're losing jobs, their credit has been cut back."

This is exactly why we're not going to see a recovery any time soon.

[mother earth]

12. The only thing we need, one word, JOBS....

without that, this can be a long, drawn out battle, recovery could take years and years.

Lack of campaign finance reform & election integrity gave us 8 years of Bush pillaging. Now we are reaping what was sown. Throwing money at it is a band-aid, they gave our jobs to others, inside and out. What's left? Nobody prospers unless we all do, unless of course you were part of the pillaging.

[tama]

13. I prefere freedom

to JOBS - aka wage-slavery aka the "choise" between being servant of some greedy master or not eating.

And for me, freedom means healthy bodily work, what this body has beed designed to do, growing and gathering the food I eat, not dependent of any slave master in any form but sharing life with other free men.

[mother earth]

14. Why shouldn't we have both?

[tama]

15. Both

wage-slavery and freedom???

As the saying goes, I cannot be really free as long as others are in slavery. :)

What do you really want, just to satisfy your basic material needs or a job for jobs sake? Or do you see a job and wage slavery as only means to satisfy your basic material needs? Or consumerist excuberance?

[mother earth]

17. No, good jobs & freedom...no consumerism, global human

rights, all of it. :banghead:

I think you are preaching to the choir.

[tama]

18. Perhaps

by "good job" you mean meaningfull self-rewarding work and not wage-slavery in service of corporate masters?

[mother earth]

19. anything else would not be "good"

;)

[tama]

20. I cannot but add

one more criteria: a good job serves greater good, is not environmentally harmfull and does not advocate consumerism. So, money is not criterion for a good job, we agree?

Now, back to original question. You said America needs more jobs but I wonder. Maybe there is shortage of high paying jobs in service of corporate masters, harmfull to environment, advocating consumerism and not serving greater good, so it seems.

But is there a real shortage of meaningfull work serving greater good? AFAIK there is more than enough meaningfull self rewarding work to do in activism of all kinds, helping others in all kinds of trouble, gardening and feeding others who cannot feed themselves, cleaning, contributing in making world beautifull through art. Etc. etc.

Looking at the situation this way, it would rather seem that it is not a bad thing but a good thing that there are now less bad jobs than while before, not a shortage of good jobs. :)

[CoffeeCat]

16. Davidowitz speaks total truth...

He is totally right.

Our economy was running on unsustainable levels--powered by behavior that is on the decline.

Look at what was going on during the boom:
--People were using credit cards like drunken sailors. Charging EVERYTHING (even groceries and gas) and taking out cash advances.
--People were using their homes as ATMs, taking out 2nd mortgages for big reasons and sometimes frivolous reasons (vacations).
--Many people were buying too much house, and as we all know some were financing it with mortgages that would blow up in their faces.
--Materialism was rampant. Everyone had to have the big house, big cars, big gas grills, granite countertops, giant swing sets for their
kids, leather furniture, designer clothes. We went through a big period of vacuous materialism where everyone had "stuffitis".
--We were at full employment and the money was flowing freely. Many were enjoying bonuses, lavish travel/expense accounts and decent salaries.

Ok--------------nearly all of this---GONE. Every single ingredient that created that boom has busted.

Look at the credit-card situation. People are now paying off, instead of maxing out. They are scared! Furthermore, the credit-card
companies are cutting people off and lowering credit limits. DONE.

Second mortgages are rare by now, and banks are no longer doling them out to people--just because they have a pulse. DONE.

The vast majority are not buying too much house. They are being more conservative.

People have soured on materialism and stuff. They are scared of getting laid off (if they aren't all ready employed). Nothing like a good
crisis to make you realize that people, neighbors and relationships are more important than Pottery Barn shelves and matching Crocs for the
entire family.

The unemployment situation is horrendous. Our economy is bleeding jobs. If you aren't unemployed, you are scared to death of losing
your job. People are hunkering down and saving for disaster. In addition, many people who rely on part-time jobs are seeing their
hours cut. Many are also taking significant pay cuts, or they're seeing cuts in perks, bonuses, or benefits.

Davidowitz has it down. What he is saying is totally undeniable.