Having been in the Retail sector for my entire professional career, I am on the front line of the driving force of our (until now) consumer driven economy. This story from the WSJ hit close to home: Recession Turns Malls Into Ghost Towns
If retail sales continue to decline at current rates, the dead-mall roster could exceed 100 properties by the end of this year, according to Green Street. That's up from an estimated 40 failing malls in 2006, before the recession began.
For towns and cities that are home to dying malls, the fallout can be devastating. Malls hire hundreds of workers and are significant contributors to the local tax base. In suburbs and small towns, malls often are the only major public spaces and the safest venues for teenagers to shop, hang out and seek part-time work.
The bankruptcy of General Growth Properties was a shock - although not unexpected due to the massive store closings in 2008 - 2009.
The Boston Globe reports:
In the short term at least, government will play an expanded role in the economy, increasing spending to fill the gap left by shrinking consumer demand, economists said. But over the long term, the nation will need to make fundamental changes by borrowing and consuming less, while saving, producing, and exporting more.
"We are going to need fewer malls and more factories," said Edward Leamer, director of the UCLA Anderson Forecast, an economic research group at the University of California at Los Angeles, "and it's going to be a long adjustment."
The adjustment is already underway. Gorrill-Palmer Consulting Engineers Inc. of Gray, Maine, is an example. As recently as 18 months ago, the civil engineering firm earned more than half its revenues by designing sites, roads, and traffic improve ments for so-called big box stores, said company president Tom Gorrill. When retail projects started to dry up, the company shifted its focus from private development to public works. Today, Gorrill-Palmer depends almost exclusively on government jobs, such as bridges and sewers.
The transition for the US and global economies won't be painless either, economists said. Consumer spending, which accounted for as little as 62 percent of the nation's economic activity in the early 1980s, peaked in mid-2008 at about 71 percent, the highest share since the 1930s, according to the Commerce Department. It has since slipped to 70.5 percent.
As consumer credit/spending shrinks, the U.S. will face a transition in the economic climate. Not that I am a proponent for building more malls, but the periphery effects of declining malls will be felt by communities, immediately. If the mall dies, it results in a loss to the surrounding businesses as well as tax revenue.
Why don't they turn them into homeless shelters frankly? And let credit card companies foot the bill for them.
I have a funny feeling they will become glorified homeless shelters anyway.
Do you ever feel like you are watching a building collapse? For years corporations, business has been like termites. Eating away at the foundation of the building, that being the U.S. worker, the U.S. middle class, good old fashioned income, high paying jobs, stable career and retirement funds. The U.S. middle class has been under attack for years and finally the entire building is tumbling down.
Yet the focus is still on consumer spending! This isn't a criticism at all of your post, more the main stream media and even main stream economists...they focus on consumer spending when we should see, every day, a story on wages, income, underemployment, offshore outsourcing, insourcing and the destruction of the U.S. middle class...
I think we literally need all of America to hit the streets in a major protest and we all chant one thing in unison, jobs, jobs, jobs, jobs.
it's like a phantom disconnect that somehow consumer spending can raise when people have no money.
It's the same thing with tax incentives....who cares about tax incentives when people have no money, they don't have work, a job.
The post is more of a commentary than a defensive stance.
I agree with you on several points:
The U.S. must increase the manufacturing base for organic growth.
We should have greater protection for workers rights.
We should have stable pensions that do not implode.
Workers need a real increase in wages and a reduction discrepancy between the wages at the top of a company and those at the bottom.
In fact, Retail employees have some of the least worker protections. Most employees are part-time and do not qualify for any benefits.
However, commerce has been a part of the economy throughout the ages. Some facets of retail are beneficial to the consumer. Malls are just an extension of the former "Market Place".
Somewhere along the line, consumers began to internalize "things" with self-worth. (I attribute this to Edward Bernays ) Spending compulsion emerged.
Readjusting the collective paradigm shift and the required lifestyle changes will not be painless - for the consumer or the local economy.
Oy, The Presuppositions!
Day by day the evidence gathers of the absolutely hopeless nature of the circumstance we're in yet all hopes are pinned on some action or series of actions arising from the very system that created this tragedy to fix it! And I assure you that there will be no fixing this mess via parliamentary means, so utterly corrupt are the filth that lead it, so utterly for sale to the highest bidder, that only direct action - mass demonstrations and the general strike - offer any promise of a remedy.
Yes, we need to focus on reindustrialization - hell, we need a kind of Five Year Plan - and to protect workers rights and the like, but won't as long as our financial system, our foreign policy, and our health care system are under the supervision of political bacteria that act solely in the interests of the lobbies whose contributions make their "service" possible. You've got the cart before the horse. Step 1: Remove every politician - bodily if necessary - from office, confining them together behind barbed wire in large concentrations away from major population centers so as to prevent their contaminating anyone but themselves with their visions of "democracy". Step 2: Hold enormous and speedy public trials for them in sports stadium environments with immediate sentencing. Step 3: Draw up a new Constitution to replace the one now so grotesquely disfigured by the very people charged with protecting it, making certain that it excludes from public office anyone "serving" under the earlier document and their forebears and progeny for four generations retrospectively and prospectively. Then your hopes have a chance of realization. It is naive and pointless to embrace hope for your proposals under the umbrella of present structures.
While many of your comments
While many of your comments are spot on, I feel that the US Republic is simply to far gone. The levels of debt held by the US federal, state, and cities (not to mention consumers or private businesses) is so large the no combonation of higher growth or productivity will avert a fiscal disaster. Worse still is that the right now, relatively speaking the US is in calm water, with a large working age population, a smaller pool of recieving benefits and people still living on average until their 70-73. Soon the babyboomers will begin retiring on mass with little to no safety net(very few will have anything moe then the equity in their house and govt benefits) or health insurance, and a smaller tax base to draw their benefits from. This is complicated by the fact that most babyboomers have taken horrible care of their bodies (which will force the state to take on greater cost in keeping them alive) and the finances (and will therefore have to live off the state by raisng taxes on young, or simply move in with younger working family members). Balance this with the fact that it seem impossible for individuals to understand that they may have to infact pay for their government services (rather then cut taxes for themselves and pass the buck onto my generation). Worse, old people do vote on mass and will comporise such a staggering % of the population that by vote alone the young will be unable democratically to modify this structure, unless americans begin voting to cut their benefits and raise their taxes, which i highly doubt. If this gerentocracy thinks that we are going to tolerate 70% rates, 2nd world infastructure, failing schools and mountains of debt in order subsidize their lifestyle I feel that next civil war will not be between liberals and conservatives, but the young and the old.
hate older people much?
Firstly the ones who had done it are the currently retired, enjoying their pensions, social security and Medicare.
The generation about to retire for the most part is not happy about what is going on and they are the 60's generation.
You have to realize it is corporate lobbyists who have gotten their agenda through Congress, not generations of Americans.
Then, claiming they didn't "take care of their bodies" is just a little blame the victim don't ya think?
One might do well to contemplate the phrase, there for the grace of God go I.
One might also realize there is massive age discrimination in the United States....so instead of looking at older people as some sort of burden to you, you might start looking at them as the ultimate labor and experience resource.
Three posts, and yet nothing
Three posts, and yet nothing to say.
Rewriting the constitution, the economic rulebook, whatever it is you think reindustrialisation means, isn't going to work. Look up Milton Friedman's speech to Phil Donahue about greed: the problem with the system isn't the rules, it's that we're flawed. And if you can't see the flaw of your own vision, it's no different than all the plans currently in place.
Everyone wants a fast solution, something drastic that'll shake up the way things are for the better. Most of these people have no appreciation for what that'll entail, but they've read Ayn Rand, or her wikipedia article at least.
Oil, food, and safety are going to be harder to come by every day for a very long time. Society might fall apart, but I doubt it. Things will just slowly change, day by day, and we'll all adjust. It's amazing that we can do this.
There is a solution here: excellence. You can demand excellence from the world, and I guarantee you it'll become a world worth living in, fighting for and believing in. But you have to be willing to give excellence. Every day, doing your best at everything you do with unflagging dilligence and dedication.
I think you're all right that it's a failing of excellence that led us here. Shortsighted vision, low standards and pure apathy.
So by all means, rage against the faltering of your empire and point out all the ways it could be better. I just think you should dedicate your life to being a role model of your beliefs, and going to bed confident you did your best every day.
I have no idea who or what you are talking to, but may I just suggest you point the mirror to yourself. This post is seemingly a desire to insult someone (who is it is beyond me) yet offers nothing in terms of economic analysis or issue discussion.
Excellence? You might start with your own ability to articulate thought.
To other anonymous drive-bys. We do allow anonymous comments, but please, if you're going to take the time to leave one, have something specific and insightful to say.
I'm really going to moderate these more in the future.
Milton Friedman and Ayn Rand
Given the way their theories worked out in the last 8 years, I think we can dismiss Ayn Rand and Milton Friedman from any economic theory whatsoever. In fact, I'd say that reality has destroyed their theories to the point that they should lose any respect as human beings; it is now clear that they were idiot-savants with no connection to reality whatsoever.
Executive compensation is inversely proportional to morality and ethics.
Maximum jobs, not maximum profits.
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Thanks for the link NC!
Where will these factories sell their goods
If all of the malls are closed?
Executive compensation is inversely proportional to morality and ethics.
Maximum jobs, not maximum profits.