All things considered, a remarkably honest article from CNBC outlines the likelihood for a wave of retail bankruptcies. In part the issue is driven by COVID bailout and stimulus funds that inflated the balance sheets and hid the natural contraction that was taking place in the last half of 2021 through today. However, bar far the biggest issue is a contraction in current consumer spending due to severe cost increases in housing, food, fuel and energy.
As we have discussed at length, consumer spending patterns shifted radically in the last year.
Despite the 2021 third and fourth quarter giving the artificial impression of strong demand, inventories were climbing and productivity in the manufacturing and services dropped dramatically. In combination these two data points both indicated a contraction in demand.
The first quarter of 2022 showed a -1.5% overall GDP. The second quarter ends next week, and the government data will be released in the last week of July. I predict that Q2 data will be heavily manipulated in two ways: (1) manipulation of import data via the Ports of Long Beach and Los Angeles; and (2) the intentional use of a lower inflation rate than currently exists in all goods. My best guess on the fake BEA numbers is a +0.2 to +0.5% positive GDP, thereby barely avoiding the technical definition of a recession.
That said, the CNBC article outlines a very bad scenario for retailers, as the consumer spending contraction hits their profit and loss statements.
(CNBC) – […] There could be an increase in distressed retailers beginning later this year, experts say, as ballooning prices dent demand for certain goods, stores contend with bloated inventory levels and a potential recession looms.
[…] The latest retail sales data shows where consumers are pulling back the most. Advance retail and food service spending fell 0.3% in May versus the prior month, the Commerce Department reported last week. Furniture and home furnishings retailers, electronics and appliances stores, and health- and personal-care chains all saw month-over-month declines.
“Consumers aren’t just buying less stuff, they are shopping less, which means a loss of the impulse-shopping moments that are critical to retail growth,” said Marshal Cohen, chief retail industry advisor at NPD Group, a market research firm.
In the first three months of 2022, consumers bought 6% fewer items at retail than they did in the first quarter of 2021, NPD Group said in a survey issued in late May. More than 8 in 10 U.S consumers said they planned to make further changes to pull back on their spending in the next three to six months, it said.
[…] Rising inventory levels are also on bankruptcy advisors’ radar because they have the potential to lead to much bigger problems. Retailers from Gap to Abercrombie & Fitch to Kohl’s have said in recent weeks that they have too much stuff after shipments arrived late and consumers abruptly changed what they were shopping for.
Target said earlier this month that it’s planning markdowns and canceling some orders to try to get rid of unwanted merchandise. As other retailers follow suit, profits are going to contract in the near term, said Joseph Malfitano, founder of turnaround and restructuring firm Malfitano Partners.
And when a retailer’s profit margins shrink as its inventories are reappraised — a routine practice in the industry — those inventories won’t be worth as much, Malfitano explained. A company’s borrowing base could fall as a result, he said.
“Some retailers have been able to cancel orders to not create more of a bubble on inventory. But a lot of retailers can’t cancel those orders,” Malfitano said. “So if the retailers that can’t cancel orders don’t knock it out of the park during the holiday season, their margins are going to go way down.” (read more)
Well I’m a really nice person, but I’m done. When I see the DelawareDoofus sticker on cars I’ll ask the obvious question: are you better off today than you were a few years ago?
Not better off than we were just a few DAYS ago.
I buy gas as often as I can because prices jump by 5 or 10 cents per day.
I do as well, but not because of the price. Here in WA state, all it took was one “NF” where the price is usually displayed. Now I top off wherever I can.
Plus, you never know the day when you’ll need gas, only to find, suddenly, there is none…which is where I believe they want us. Sorry…no more. Saving the planet, doncha know.
That’s just smart. Ever penny counts. Every single one.
I drive a Tahoe and I top my tank off just about every day at Costco. Never let it get under 3/4 full. Been doing this for over 6 months now. Makes me feel there is still some $2.99 per gallon gas swishing around in that tank, mitigating today’s prices. Probably delusional, but hey, sometimes one needs to be inventive mentally, in order to keep their sanity and blood pressure in check.
I live in Idaho Falls, ID, now, where gas is 4.95 to 4.99.
So glad to be out from under the yoke of the CCP (California Communist Party). The Party is implementing an additional 5.6% tax per gallon that takes effect on July 2nd. Oh Joy!
POLA &PLB have been manipulating the GDP per “WH”for the last 2 quarters. I read Zerohedge.com so I can have some understanding of wtf is going on.
None of this has to do with Biden except for the fact that he’ll sign anything. Biden doesn’t even know his own name.
If the window were open and a chewing gum rapper landed on his desk, Biden would sign it.
Joe Biden has been a $hothead clown for 45+ years. It has everything to do with him.
Being multi billionaires is not enough for these genocidal maniacs. How much is enough? Really, how much is enough? Even if they took everything from us it still wouldn’t be enough. This kind of unchecked greed is a sickness and danger to humanity.
@Sundance “However, bar far the biggest issue…”
By far…
Typo.
Cheers.
You should offer your services!!
He just did.
Target stock drop a $100/share from it’s high in the last 6 months or so. Best Buy dropped 50% since Thanksgiving last year. Looks bad trading at 52 week lows.
“Best Buy” is toast.
We were regular Best Buy customers but their service and quality fell off. Won’t miss them.
We’ve had good luck at Best Buy. We use their quick order pick up to buy things we used to get from Amazon (phone chargers, ear buds, etc). Most times the stuff is ready in under an hour. It’s helped tremendously while we consciously cut our Amazon spending. I’ll be sore to see them go.
If you never place an Amazon order over $40, you can kill them with high costs. They need a much higher average order size to make money.
I look for products at Amazon and go directly to the company and buy it. We only have their streaming service for $10 a month and sell my books there. I’m looking for an alternative as it seems they put conservative Christian themed books in the back digital shelf. Machine Messiah is my most recent release. I’m working on the second book but I run my own small business so creative time is limited.
make this valuable knowledge go viral to do our small part in throwing sand
Except for the fact that you never compared prices at best buy vs. Amazon and don’t say you do.
For me personally, I refuse to shop via Amazon, regardless of price. I’ll do without first. The principle is more important to me than the price.
Amazon also sells a lot of cheapo knock off products. The real mikuni carbs I bought for my vintage motorcycle were like $165 each, the fake mikuni carbs at Amazon were $45, lol, and they are total junk.
I’ve been buying blu-ray movies from them online for the last year because I moved out of ATL and now the nearest BB is 35 miles away. They had free shipping by USPS and now they started charging 3.99 per disc. I was in the store about a month ago and asked about what happened to free shipping? They told me that BB was getting out of selling blu-rays and wouldn’t be displaying them in the stores anymore.
I was just in a Target in the Denver area trying to do some shopping for my sister who can no longer drive. That place did not have a “womens” section. It was a conglomerate of unwearable clothing (torn jean shorts, no elastic waist stuff). Huge sizes (the mannequin had a butt the size of a planet!). It was just ridiculous! I couldn’t find anything wearable for my 73 year old sister. Real women do not exist for Target. That is the last time I will ever step foot in one.
Target clothing is definitely aimed at the young people. I stopped shopping at Target years ago because they never seemed to have what we needed. For instance, they’d be out of blue uniform shorts in August even though the majority of the public and Catholic school kids in the area were wearing them. Then all that political stuff kicked in and it became a deliberate boycott on my part. I don’t miss them.
I have walked around Target in Redding Ca. twice since their groomers bathroom crusade 3 years ago lol. They
Are still at the top of my no no list . Dick’s Sporting Goods made it as well.
I shop thrift stores for clothing.
It’s time to call government “responses” to “COVID” what they are: an attempt by GloboHomo to destroy independence.
FUBAR = Joe Biden
F¥€KED UP BEYOND ALL REASON = Joe Biden
Went to a Save-A-Lot grocery store in my area to pick up a few things. I saw a lot of empty shelves throughout the store. They have already remodeled the place; now they’re closing an hour earlier each night. I wouldn’t be surprised if they go out of business.
Sarasota Save-A-Lot has empty shelves at times. Trucking industry leaves them in the lurch, is my thought.
I don’t recall seeing more than a couple of people shopping in that store and only 1 cashier at the check-out line. This was last Monday around noon. There might be supply chain issues, but that store looks like it could be closing soon. I could be wrong, though. We’ll see.
As a Tennessean I would advise that no one in their right mind venture to or even through Memphis. Get off at the wrong exit and you will be gone without a trace.
I live in the Memphis area. The only reason I venture inside 240 is to leave town. I would love to exit Shelby county too and move East of Nashville.
BLACK Democrat cities.
This seems so familiar………
Oh yeah. 2006 when the housing market collapsed, then the retail market collapsed, then the banks collapsed.
Hmmmm, what’s different this time?
Oh yeah, we dropped the interest rate to ZERO for TEN YEARS. This time we can’t do that and the interest rates are going to go to double digits by the end of 2023.
Don’t believe the FDIC. Get your money out of those banks. Credit Unions are the only safe place at this point outside of your mattress.
And none of the debt was paid back.
Credit unions are not safe either. A law was passed in 2009 or 2010 that essentially says bank holding of derivatives get paid before depositors. This includes credit unions that are “insured” by the fdic. So know your credit union well before you rely on them. Take a hard look at their financials to see where their debt is.
I personally don’t trust any of them.
Credit Unions are insured by NCUA not FDIC. I am a member of Navy Federal, which now is the biggest credit union in the US. I think they keep a lot of their mortgages on their balance sheet, not selling them to Fannie/Freddie and they also do their own servicing rather than selling it off.
You would be correct on all counts and derivatives do NOT get paid first and they are most definitely NOT covered by the FDIC. When I worked there during the banking crisis of 2009-2013 those derivatives were one of the big reasons for failures. Gambling with depositor funds put quite a few bank presidents in jail.
And no derivatives. Many regional banks also don’t have derivatives.
Credit unions have their own deposit insurance fund, separate from the FDIC.
You can check the financial health of the CU at http://www.bankrate.com.
They still not done with the destruction part of the “Build Back Better” plan.
Lord, have mercy!
Great reset is happening if we want it or not
Long as we have pice worst fake president our country will not Better people,
also we have get Rid of propaganda corrupt Nancy and hard cord socialism Democrats,
Over generations, Gramsci’s collusive coup d’oeuvre (“artful subversion over time”) implanted Deep State mores. Subjecting economies to crippling debt, onerous inflation, ruinous costs-and-taxes, crony-oligarchic States blight personal incentive, stifle growth and opportunity, squander resources, corrupt and condemn naἲve polities to perpetual dependency, poverty, under slavish despotism. As predatory stürmers wheel-and-deal, Police State apparats hone poisoned fangs.
Exactly so. And our “free” government indoctrination centers have, over those generations, carefully avoided anything revealing about these evil, corrupt banksters and their history and plans for us.
Most people today, here and around the world, have no clue what “central banks” are.
If they did, they would rise up and abolish them permanently! It’s why the banksters COULDN’T allow Dr. Ron Paul to win; his battle cry is “END THE FED!”
EVERYTHING follows from that!
We had all kinds of problems with insolvent banks before the fed.
Not the kind or severity or longevity of bad times as with the creation of the Fed.
Please do some more reading and research; I recommend the sources I named at least to start with.
It took the Federal Reserve Bank (which is neither “federal” nor has “reserves” nor is a “bank,” by the way) just barely over a decade to produce the Great Depression, and kept that going for YEARS — nationally and globally.
Never happened before. Only brief, local downturns. Please read more, and unbiased, sources.
Note: The Federal Reserve System was ushered in secretly by just a few moneymen in Congress and the White House (Wilson was the president), in 1913. And the rest, as they say, is “history,” right down to where we find ourselves today.
The shipping issues are large. Trying to get closet systems, roofing, heaters, switches, outlet boxes for new home and they are unavailable or no longer in stock. Hundreds of ships off California coast. China is slow walking loading and unloading ships.
I learned that Amazon or affiliates seem to be buying up stock of these items and raising the prices for them online. I was having trouble finding fittings and boxes for pvc conduit but they’ve got tons on Amazon, they disappeared overnight everywhere. I noticed it started with the hand sanitizer a couple years ago. I’m not saying it’s Amazon doing it but they are definitely facilitating it
I have 5 airbnbs so I need supplies fast…I can only count on amazon when I need something in a day or two…their furniture prices have gone up but other things have remained stable..delivery far better than a year ago..I shop the dollar isle at Dollar General..never go to Dollar tree anymore..I get my soaps and paper products there..my utilities and worker fees are through the roof..100$ an hour for a cleaner. I paid my regular cleaner 700$ for a deep clean and porch power wash..trying to cut out cable bills…I just got hit up for FL hospitality tax..threat of leans, the municipalities are cracking down on back tax..moving right ahead with liens..airbnb restrictions, rental inspections and restrictions in STR…I believe they are trying to push us out of our properties..
Have you read or listened to putins speech from yesterday? He discusses western economics from an interesting perspective…. many good parts to it. Do I trust putin? Idk. But this was an epic speech imo
https://www.adamtownsend.me/putin-speech/
“…Indeed, these differences are being suppressed and swept under the rug. Frankly, the democratic procedures and elections in Europe and the forces that come to power look like a front, because almost identical political parties come and go, while deep down things remain the same. The real interests of people and national businesses are being pushed further and further to the periphery.
…The attempts to keep up appearances and the talk about allegedly acceptable costs in the name of pseudo-unity cannot hide the main thing: the European Union has lost its political sovereignty, and its bureaucratic elites are dancing to someone else’s tune, doing everything they are told from on high and hurting their own people, economies, and businesses. …”
“….Because they could not or would not devise any other recipes, the governments of the leading Western economies simply accelerated their money-printing machines. Such a simple way to make up for unprecedented budget deficits.
I have already cited this figure: over the past two years, the money supply in the United States has grown by more than 38 percent. Previously, a similar rise took decades, but now it grew by 38 percent or 5.9 trillion dollars in two years. By comparison, only a few countries have a bigger gross domestic product.
The EU’s money supply has also increased dramatically over this period. It grew by about 20 percent, or 2.5 trillion euros.
Lately, I have been hearing more and more about the so-called – please excuse me, I really would not like to do this here, even mention my own name in this regard, but I cannot help it – we all hear about the so-called ‘Putin inflation’ in the West. When I see this, I wonder who they expect would buy this nonsense – people who cannot read or write, maybe. Anyone literate enough to read would understand what is actually happening….”
Let’s see………
1) gas, diesel, electricity, food and rent are and have been up double digits on Americans.
2) home values could drop 20-50% once the home bubble bursts
3) then as the possible recession accelerates, companies could begin to layoff thousands of workers
4) and then if all of this isn’t enough, Americans 401k and IRA’s could get crushed by a stock market that tumbles possibly 20-60%
I really hope in a month or two there is a massive survey asking Americans this simple question…………
How is the left’s Build Back Better Program working out for you and your family?
These leftist radicals and RINO’s who have aided and abetted the left and caused all this pain and suffering by billions worldwide, MUST be voted out of political office FOREVER!
I’ve been seeing articles about businesses closing and company layoffs for several months already.
*****
BIG COMPANIES CLOSING STORES ACROSS AMERICA
https://www.lovemoney.com/galleries/amp/107855/big-companies-closing-stores-across-america
I stopped shopping at Target the day after they allowed men in the ladies rooms. NO THANKS! I HAVE GRAND DAUGHTERS. IN FACT: F*CK YOU! Stay in Minneapolis WHERE YOU BELONG!
I think the majority here looks at this wrong… We’re here because of an out of control government that’s been fueled by fake money for a century.
There are no benevolent sides, parties, past presidents. Andrew Jackson was the last we had who showed a shred of common sense on this subject.
Let this train go off the cliff… Sit back and take it in. Encourage it… The self destructive behavior needs to run it’s course.
Well, they could thank Jackson for one of the worst recessions on record after he left Van Buren holding the bag.
And exactly how bad was that recession? And why did it happen? NOT because of Jackson.
Did America recover swiftly and well from that recession? How, and why?
For those who’d like to understand, please look up and read works by Murray N. Rothbard, Dr. Gary North, Dr. Ron Paul, Dr. Robert Higgs, Dr. Tom Woods, Jr., etc. Most authoritative scholars of history, and the history of money and finance who are against the central bank idea and Keynesianism, can be found readily at the Mises Institute online.
Also read G. Edward Griffin’s definitive work, The Creature from Jekyll Island: A Second Look at the Federal Reserve.
It’s my believe that many retailers would just as soon shut down actual shops, where you could go in and come out with the item you want, maybe get sales help, and pay in cash.
For many, perception is reality.
if you tell them we’re not technically in a recession, they believe it and act accordingly, continuing to spend and leverage.
If you tell them we’re in a bad recession, they will respond by curtailing spending.
Thus, to some degree this can be a self fulfilling prophecy – until the narrative is too disjoint from reality. Then it all burns to the ground.
The government playing games with the numbers is just trying to manage the perception. Actual reality is unchanged.
Many outlets only carry “made in China” ! personally they can all go away! love my hand made USA clothes and products thank you very much.
In a couple years people will wish we were only living through a recession. The spirit of another Great Depression looms before the Western world. By all appearances, this is by conscious design. I knew the transition away from the PetroDollar would be rough but our masters may be setting up the world for nothing but misery.
The elites can only build back better if politicians are placed in desperate economic situations, giving them the cover for all the goodies coming from the new world order like digital identities, carbon trading regulations and measured consumption.
The Great Reset has been designed to lower our expectations about everything, including the standard of living we’ve become accustomed in North America and across Western Europe. They want drastically higher energy costs, making “luxuries” like SUVs affordable only for the very rich.
Destroying existing retail is one step on the march to slavery. It’s been decided (by whom?) capitalistic enterprise is a road block on the way to their glorious global scheme which resembles communism more and more each day. Who benefits from the destruction of retail? A few mega-chains like Walmart and Amazon, outlets clearly controlled by the same people behind Build Back Better and other globalist philosophies.
Every single decision and consequence of importance increases their control over the cattle on a micro level.
I think the attempt to gin up a positive 2Q GDP growth figure is destined to fail.
The Atlanta Fed is already at 0.0%. Home sales (new and existing) are diving. Housing starts have fallen significantly. Retail sales fell 0.3% in May (these figures are not adjusted for inflation, so sales fell significantly in real terms). The IHS Manufacturing index dropped sharply in May.
That said, the manipulations Sundance fears might generate a positive figure in the first release, but a more May and June data trickle in after the first release, the second and third releases appear to be destined to dive into negative territory, giving us the two quarters in a row of contraction — the classic definition of a recession.
The strategy to cover things up for as long as possible is not wise. The second release will be in late August, when a larger percentage of the population is paying attention. The third will be in late September, close to when early voting starts. Even a barely positive first report on the 3rd quarter (if it’s even possible) in late October won’t erase the reality that we’e in a recession, especially if the number went from slight positive to negative in the 2Q reports (leading many to believe it will simply happen again).
The final wild card is that the first release for the third quarter will be in the month when the government revises previous figures going back a few years. It’s possible the government could look for ways to justify increasing the 1Q 2022 contraction a bit (or reducing one or both of 2021’s final two quarters) to try to “save” the second quarter of 2022. I still think it will be all for naught.
Jamie the destroyer of liberty.
Reminder:
As brick and mortar retailers sink to deeper depths, AMAZON rises to greater heights.
My opinion is to support the small local businesses and absolutely drop the big chain stores who dropped the “My Pillow” products. Those who removed Mike Lindell’s products are NOT AMERICA FIRST. They are all in with China. Mike Lindell’s products are AMERICAN MADE AND PRO FREE AND FAIR ELECTIONS. This is a simple thing to do. Please stand for America