I begin every business day by going to Bloomberg to check the price of commodities and the release of data on the economic calendar. What has caught my attention is the disconnect between press releases on retail store closings with the loss of jobs for all their employees and the government's weekly stat on employment.
Now, I realize that an announcement of a store closing and the actual closing could be months from that release date even up to a year. In addition, periodically, some states do estimates for unemployment because they cannot meet the timeline to gather their information. However, I began adding up the math during the Obama administration and now, the Trump administration to the announcements of corporate store closing with the government agency reports and it don't jive!
This is the last three reports on employment by the government.
February: -12K and continuous claims at 234K
March : 20K new claims and continuous claims at 243K
April : -1K and continuous claims at 234K
What It Means
The totals point to only 7K new claims in the last three months and unemployment is down to 4.5%, according to the government. Do you know what I think? I think that they have developed a new system to the confusing system that was already in place because we have 66 million people in this country who are not counted. They are just listed as not in the participation workforce. This number is more than half of our working population. It is the only figure that answers the question why retail is dying. It is not just Amazon and online purchases. The total number of sales in that method is still only 14% of the pie.
Closer Look
It was reported in March that 22,000 jobs were lost in general merchandise. Then, there was another 13,000 lost at department stores, and finally, another 6,000 in apparel shops. The way I was taught math, this adds up to 41,000 people out of work and only 20K was registered for March by the government. See what I mean?
Now, I know certain job classifications like waitresses, real estate sales, cab drivers and similar do not qualify for unemployment benefits because they don't make enough to meet guidelines, but things are still not kosher. Keep in mind that all those people are broke and some are still included as being in the workforce. That's the government.
Big $Numbers
Keep this in the equation. Since I only know the retail industry for data, now consider all the other industries because commercial bankruptcies have jumped 28% and personal filings have soared 40%. In the fourth quarter, auto delinquencies are approaching the same level as the disaster of 2008 at $23.27Billion. By the way, auto sales have declined the last three straight months and the shadow of 3.6 million leased cars are returning to lots for sale.
It Gets Worse
We know the malls are dying a slow death because their anchors are shutting in record numbers. Consider the following: Sears, Macy's, and J.C. Penny are all closing at least 100 stores this year. How many thousands of jobs will be lost with just those three? The total number of store closings is scary as 2,900 locations have closed from 18 different retailers and a possible 8,700 more by the end of the year. If you didn't know, cashiers and retail salespeople are the two largest job categories in the US with over 8 million employed between them. This represents 25% of all jobs in America. There have been 9 retail bankruptcies in 2017 so far, and sadly, that already matches the total for 2016. Adding to the negative vibe, retail has declined the last two months
We already know Radio Shack has gone the way of the Doo-doo bird and HHGregg will soon be in the list. They announced that they will close all 220 of their stores and layoff 5,000 people in the process. Keep that number in your head as we read the reports on claims for the rest of the year because unemployment at 4.5% is one big lie!
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