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This dismal picture is confirmed when we start a sector-by-sector review of U.S. retailers. Sales for local merchants were actually down 1.3% this December (even before adjusting for inflation). Similarly, sales at U.S. general merchandise stores, electronics stores, and food stores were also lower -- even before subtracting inflation. Looking at the retail chains , sales were up a mere 3.1% in December 2010 over December 2009 (more than 5% below the rate of inflation). However the real "horror story" here is when we divide these retailers between "luxury outlets" and "discount retailers", the latter could only manage a totally inadequate gain of 1.2% in December, while the former rose by 8.1%. In other words, the U.S. luxury sector, the best segment of the entire U.S. retail sector (by a wide margin) was still not able to boost sales gains to a level equal to the rate of inflation - meaning even these retailers also sold fewer goods in December 2010. Even after wading through all of these numbers, however, we have still only seen half of the nightmarish reality of the U.S. retail sector -- and the U.S.'s "consumer economy." As many know, a consumer economy is a "service economy": one that is especially dependent on employment levels (to fuel all of that consumption). Moreover, with roughly 3/4 of the U.S. economy totally dependent on consumption, U.S. retailers comprise the second largest component of the entire U.S. labor market (behind only the bloated sector of government workers). This provides us with yet another key dynamic of the U.S. economy: not only does the U.S. need its consumers to spend, spend, spend, but it needs them to go to retail outlets to do that spending. While December sales rose 0.6% from November, " non-store sales " (which generally means on-line sales) rose 2.6%. In other words, if we subtract those strong on-line sales from the overall number, we see that total sales at U.S. retail outlets was flat-to-falling in December - and remember these numbers have not been adjusted for inflation. This is how retail sales can rise 7.9% from December 2009, while sales at local merchants, electronics stores, general merchandise stores, and food stores can simultaneously all be falling. Obviously on-line sales can never be a substitute in the U.S. economy for sales at retail outlets, since the former employs practically zero people.
Thus, not only are the overall sales of goods falling in the U.S. consumer economy, but the jobs produced from all that shopping are plummeting at a much, much faster rate. This is why despite nearly two years of a (supposed) "U.S. economic recovery," U.S. mall-vacancy rates keep going higher and higher - rather than lower and lower. Readers must remember that a big part of the massive U.S. housing bubble was a concurrent retail sector bubble, where U.S. retailers ratcheted-up their total number of outlets and "floor space" at a dizzying rate -- all built upon the temporary wealth of the U.S. housing-bubble. That "wealth" has all evaporated, but all the retail outlets remain, as do the debts for constructing all of these malls. If this nightmare still isn't bad enough for you, we can easily make it worse. Along with massive debts, empty stores, and the falling sales of goods; U.S. retailers are seeing their profit-margins severely squeezed by exploding commodity prices. If cotton prices double , but clothing prices only rise by 10%, then the rest of that increase in cotton prices must be "eaten" by U.S. clothing retailers in the form of shrinking profit margins. As U.S. retailers begin all simultaneously slashing their payrolls, those further job-cuts will lead to an even more rapid drop in sales levels, and even lower profit-margins - since unemployed consumers obviously can't afford to pay the costs of soaring commodity prices. This is a downward vicious-circle which can have only one possible outcome: the complete collapse of the U.S. retail sector and the U.S. consumer economy. If Americans are looking for someone to blame, the target is obvious: Wall Street. If the Wall Street Oligarchs had not been allowed to vacuum-up (and hoard) all of the $trillions that "Helicopter Ben" has cranked-out on his trusty printing press, all of those Bernanke-bills would have flooded into the U.S. economy. This, in turn, would have sparked massive inflation, but at least it would have put money into consumers' pockets (and supplied "fuel" for the U.S. consumer economy). It is no more feasible for a consumer economy to run without the fuel of large numbers of consumer dollars than it is for a gas-powered automobile to run without gasoline.
The U.S. retail sector has been simply "running on fumes" for the last two years, desperately hoping that at some point Bernanke's lies about a "U.S. economic recovery" would become a reality. That has been revealed to have been nothing more than a foolish hope. If 2008 and 2009 had been ordinary years in the U.S. economy, then the fact that the 2010 shopping season was slightly worse in the U.S. than those two previous years would have been no big deal. However, given that 2008 and 2009 were the two worst years for the U.S.'s consumer economy in its entire recorded history, doing "slightly worse" than that is nothing short of an economic disaster -- and we all know how good a job the U.S. government does in responding to "disasters."