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 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.