The Obama administration has been trying to convince us for the past couple of months that the economy is recovering. One of the signs of a recovering economy is consumer spending. Increased consumer spending generally means that retailers begin to see more sales and business is improving.
However, that’s not the case with many major retail chains. In fact, they continue to see poor sales figures and loss of profits. Last year, J.C. Penny Co. saw quarterly losses of 26% compared to the same quarters a year earlier. Kmart and RadioShack have been closing stores because of lost sales and revenues.
In an analysis by 24/7 Wall St., a number of major retailers are expected to start closing more stores this year. Those are:
- Best Buy – estimated closing of 200-250 stores.
- Sears Holding Corp – estimated closing of 175-225 Kmart stores and 100-125 Sears stores.
- J.C. Penney – estimated closing of 300-350 stores.
- Office Depot – estimated closing of 125-150 stores.
- Barnes & Noble – estimated closing of 190-240 stores.
- GameStop – estimated closing of 500-600 stores.
- OfficeMax – estimated closing of 150-175 stores.
- RadioShack – estimated closing of 450-550 stores.
If their predictions are accurate, that means that between 2,090 to 2,665 stores will be closed this year from just those 8 companies. How many other chains, large and small or just single stores are also going to be closing their doors? How many thousands of people are going to lose their jobs this year because of the economy? How many other businesses that supply products to these stores will lose business and have to shut down or layoff people?
Many people don’t realize that when a large store closes its doors, it’s not just those employees that lose their jobs, but it affects every other business that they do business with. The companies that supply the merchandise and materials will also lose that amount of business. The city, county and state also loses tax revenues. The utility companies lose revenue and so on. The effects are far reaching and when you start talking about over 2,000 stores closing, those effects are greatly magnified.
Have you walked through the mall in your area recently? How many small or large stores did you see that were closed and empty? Drive through parts of town and look at how many stores in the smaller strip malls have been vacated.
I don’t see these things as being signs of a recovering economy, but signs of an economy that is still struggling and falling. The Obama administration may try to cover the truth with smoke and mirrors, but in the end, the empty buildings and unemployed Americans will tell a much different story than what we are being led to believe.