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No. of Recommendations: 4
Bob,

Let's assume you are correct in all respects. As we walk down Main Street and see the stores staying shuttered and as we watch department store chains being closed, Amazon and a few who adapted, like Walmart, are demonstrating the power of the shift to e-business. When the mall anchors disappear, can the mall, as we know it today, survive?

Why are the "mail order" firms able to flourish? Simple - they operate with lower overhead while, at the same time, being able to offer a far greater variety than the brick and mortar firms.

(I can attest to this model working as one of my firms,, starting in 1980 worked on the premise of offering hundreds of thousands of products by catalogue - picture a telephone book - which could be delivered promptly as a drop-ship directly from manufacturers and distributes. The advantages of running a multi-million dollar business selling "things" without the expense (or cash jailing) aspects of inventory was immense - especially when almost all of our original customer base paid in advance and we bought on 30 day credit - later, as we moved into mostly government sales, this additional perk went away, as they too bought on credit. Not only did the model allow me to operate efficiently with far fewer people, but gave me the luxury to be able to afford more knowledgeable and more capable employees than my competitors)

We are seeing a significant drop in the number of people required to operate the retail function of our nation. It is true that the logistics end will require more "last mile" delivery drivers, but the current model is reducing the number of sales, support, managerial and warehousing personnel. Of course it requires more programmers, IT people and automation specialists, but the overall cost of personnel is far lower. And, of course, it requires a smaller, less expensive (doesn't have to be in a retail location) real estate.

So the sales being made are significant, it is also significant that the profit from those sales is being concentrated in firms which are dedicated to reducing employment too a minimum. On a net/net basis, fewer will be returning to their jobs when this is over.

Investors in retail, REIT's and delivery companies should take note, but also we should consider, once the government dole is ceased (unless we go all Yang), will this retail high (in both uses of the word) drop?

Jeff
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Year to date retail sales were down 1.8% compared to 2019.

https://www.census.gov/retail/marts/www/adv44x72.txt

Jaak
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Year to date retail sales were down 1.8% compared to 2019.

You mean the growth was less, not that they were down.

DB2
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No. of Recommendations: 8
"...Retail sales for August were at an all-time monthly high, up 5% year-over-year and up 2% from the previous high in January..."---DrBob2

Dear DB:

I saw the link you posted so the stat is valid but a picture is worth a thousand words. August retail sales missed expectations yesterday. I'm guessing that in dollar terms it set a record but month over month as well as the revisions indicated a slowing in spending. The first link is from the Census Bureau also.

https://www.census.gov/retail/marts/www/marts_current.pdf

The next is from CNBC.

https://www.cnbc.com/2020/09/16/us-retail-sales-august-2020....

I'm guessing it was the supplemental unemployment benefits going towards non-discretionary spending as well as those who have adapted and have discretionary income to spend.

Here's what concerned me. There are two possibilities that may overlap. First, those benefits were having more of an impact than expected, and second, why would those with discretionary income suddenly hit the brakes, so to say?

Your holistic Fool,
FM
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No. of Recommendations: 1
You mean the growth was less, not that they were down.

=========================================

No - I mean that retail sales in the first 8 months of 2019 were 1.8% higher than the retail sales in the first 8 months of 2020. Which means that total sales were down.

Jaak
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I mean that retail sales in the first 8 months of 2019 were 1.8% higher than the retail sales in the first 8 months of 2020. Which means that total sales were down.

As one would expect with the virus splattering the world like a hellish bat out of the Wuhan wet market.

I saw the link you posted so the stat is valid but a picture is worth a thousand words.

Sure, but June was a "trampoline" month from the terrible spring. Looking at the percent change from July to August we see:

2019 +0.43%
2020 +0.56%

DB2
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Sure, but June was a "trampoline" month from the terrible spring. Looking at the percent change from July to August we see:

2019 +0.43%
2020 +0.56%
__________________________________________________________

Read a book once entitled "Been Down So Long It Looks Like Up to Me" (by Richard Fariñ)

Certainly the numbers are not soaring with eagles.

Jeff
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No. of Recommendations: 2
Read a book once entitled "Been Down So Long It Looks Like Up to Me" (by Richard Fariñ)
Certainly the numbers are not soaring with eagles.


I enjoyed Farina's book (except the ending). I also enjoyed Mimi's singing, although she always felt very much in the shadow of her sister, Joan.

Jeff, I don't know about eagles, but truth be told, I think very few people here (if any) would have predicted back in March and April that in August retail sales would be at an all-time high.

DB2
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I think very few people here (if any) would have predicted back in March and April that in August retail sales would be at an all-time high.
________________________________________________________

You are likely correct. OTOH, it makes sense as many have been receiving a substantial (from their point of view) windfall from the government while they await employment and, frankly, they are spending it. Maybe it's that they have time on their hands and shopping is a rewarding outlet.

Frankly, other than food (groceries, as we have ordered exactly 3 take-out meals since early March), we have purchased very few items. Other than rent, insurance, car expenses and the odd piece of clothing, the majority of our annual expenditures are travel related. since returning home at the end of January, these have pretty much evaporated and I don't anticipate being able/willing to travel abroad until at least 2022.

So, in our case, while we didn't receive any of the assorted government handouts, our spending dropped from what is our normal habit.

I'm wondering, in the presence of department store chains going bankrupt, what/where people are spending the big bucks.

Jeff
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You are likely correct. OTOH, it makes sense as many have been receiving a substantial (from their point of view) windfall from the government while they await employment and, frankly, they are spending it. Maybe it's that they have time on their hands and shopping is a rewarding outlet.


Could be, I think there is more to it though. Home fitness equipment sales are through the roof. Camping gear sales are through the roof. Restaurant sales are down, but grocery sales are up. Pets, gardening stuff, books, bikes, and musical instrument sales are all up. Home office equipment is flying off the shelves.

Basically, people seem to be replacing things/activities that they used to do outside the home to things they can do inside the home. All that costs money.
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I'm wondering, in the presence of department store chains going bankrupt, what/where people are spending the big bucks.

Well, AMZN revenues are up 28% year-over-year so people are definitely buying something. :-)

My wife and I were going to spend X thousand dollars on vacation in Maine this August, which didn't happen. She bought some exercise equipment and I upgraded my stereo/hifi as I listen to a lot of music. Speaking of music, sales of recorded music are up 6% this year from last.

RV manufacturers are having a hard time keeping up. House builders are definitely having a hard time keeping up. It is well known that a new house leads to lots of spending -- different furniture, a new rug for the TV room, et cetera. There is some shift from services consumption to goods consumption.

DB2
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Interesting. Six months ago the US and world economies received body blows from lockdowns that sent them down by unprecedented amounts.

Then in July retail sales rose to an all-time high to little notice. Then in August they increased again by a larger percentage than they rose in the same period in 2019 to another another all time high. What was the reaction?
- The increase was below expectations
- The increase from January was less than the year before
- We're not flying with eagles
- The increase wasn't as great as it was in June

Interesting.

DB2
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No. of Recommendations: 4
Bob,

Let's assume you are correct in all respects. As we walk down Main Street and see the stores staying shuttered and as we watch department store chains being closed, Amazon and a few who adapted, like Walmart, are demonstrating the power of the shift to e-business. When the mall anchors disappear, can the mall, as we know it today, survive?

Why are the "mail order" firms able to flourish? Simple - they operate with lower overhead while, at the same time, being able to offer a far greater variety than the brick and mortar firms.

(I can attest to this model working as one of my firms,, starting in 1980 worked on the premise of offering hundreds of thousands of products by catalogue - picture a telephone book - which could be delivered promptly as a drop-ship directly from manufacturers and distributes. The advantages of running a multi-million dollar business selling "things" without the expense (or cash jailing) aspects of inventory was immense - especially when almost all of our original customer base paid in advance and we bought on 30 day credit - later, as we moved into mostly government sales, this additional perk went away, as they too bought on credit. Not only did the model allow me to operate efficiently with far fewer people, but gave me the luxury to be able to afford more knowledgeable and more capable employees than my competitors)

We are seeing a significant drop in the number of people required to operate the retail function of our nation. It is true that the logistics end will require more "last mile" delivery drivers, but the current model is reducing the number of sales, support, managerial and warehousing personnel. Of course it requires more programmers, IT people and automation specialists, but the overall cost of personnel is far lower. And, of course, it requires a smaller, less expensive (doesn't have to be in a retail location) real estate.

So the sales being made are significant, it is also significant that the profit from those sales is being concentrated in firms which are dedicated to reducing employment too a minimum. On a net/net basis, fewer will be returning to their jobs when this is over.

Investors in retail, REIT's and delivery companies should take note, but also we should consider, once the government dole is ceased (unless we go all Yang), will this retail high (in both uses of the word) drop?

Jeff
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No. of Recommendations: 0
Investors in retail, REIT's and delivery companies should take note, but also we should consider, once the government dole is ceased (unless we go all Yang), will this retail high (in both uses of the word) drop?

It could indeed, although it should be noted that the August figures are for a period after the CARES checks stopped in July.

I don't know what will happen this fall and next year (my Tarot license was revoked years ago) but it is important to acknowledge that things are not playing out as we expected them to back in March and April.

DB2
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No. of Recommendations: 3
"...Then in July retail sales rose to an all-time high to little notice..."---DrBoB

Dear view-pointed Fool:

If I may, many times the same economic category may be viewed from different perspectives.

The category may be viewed from a long term perspective, thus a way to measure 'all-time highs'. Other times a category may be measured month-over-month or quarter over quarter.

So comparing an all-time-high to month-over-month is comparing the proverbial apples against the proverbial oranges.

A trader prefers month-to-month changes or week-to-week changes. A holistic-macro-economist might look at it, for instance, over the ten-year-expansion which ended because of the global pandemic.

I read more about shorter-term comparisons (which the Wall Street media mavens euphemistically call 'high-frequency-data') than I do about long term data, except perhaps the all-time low of unemployment, which has been trending that way for the past ten years.

Consumer spending has been trending up over the time of that 10-year-expansion, so have wages, even minimum wages, with persistent 'dis-inflation' which gave consumers more spending power.

Also, consumer spending falls under two general headings: Discretionary Spending and Non-Discretionary Spending. Because of the wealth-gap, the lower-half might have been able to spend on more necessities, like nutrition. The upper-half was able to spend more period. Perhaps upgrading from Porsche to Ferrari (a much better choice, I might add) and everyone 'in every half'* took advantage of the efficiencies of Amazon and Walmart.

Just keep in mind that the week-long-Superbowl-half-time-like spin on to-be-announced economic data keeps the 'home-gamers' glued to their screen, which is periodically interrupted by commercials on cable TV. Digitally, these High-Frequency-data-points are then edited, condensed, positioned-around-visually-peripherally-distracting-ads, and then digitally-delivered to us according to our user history which they're not supposed to do, but their not-supposed-to-be-doing seems to be extraordinarily accurate.

Short-term-data sells.

The whole point is that yes, consumer spending broke a previous all-time high. The data is there. But the high-frequency trend has suddenly dropped. The data is there.

However, it's also worth noting that in a consumer-driven economy, consumer-spending is an important topic, in general.

Your ----- Fool,
FM

*Economists tend to track multiple halves, more than 2, of single entireties.

P.S.: Today is a 'triple-witching-expiration' day. So you're likely to hear that Robin Hood traders are the ones responsible for creating today's volatility in the $30-trillion dollar stock market.

P.P.S.: 🤣😂🤣😂😂😂🤣🤣
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So comparing an all-time-high to month-over-month is comparing the proverbial apples against the proverbial oranges. A trader prefers month-to-month changes or week-to-week changes. A holistic-macro-economist might look at it, for instance, over the ten-year-expansion which ended because of the global pandemic.

Sales for the last three months (June, July, August) were 2.4% higher than the same three months in 2019. So, did the 10-year expansion end or was it just interrupted by a really nasty quarter? Of course, we won't know until the future unfolds itself.

DB2
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So, did the 10-year expansion end or was it just interrupted by a really nasty quarter?

Or was there a short term reprieve to the anticipated downward trend because of an investment required for a change in pattern, such as work from home and school from home, in addition to the shopping therapy that many took to and will cease as the CC bills come in?

IP
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"...So, did the 10-year expansion end or was it just interrupted by a really nasty quarter?..."---DrBob2

Dear DB:

That's an absolutely great question! It's like asking when does a bull market end?

There was an economic expansion that began after a recession 1980-1982; the recession of 1990-1991 was followed by an economic expansion that lasted until 2000; then an expansion until the recession of 2007-2009 followed by the expansion which was shut down by the pandemic.*

But here's the common thread in the above-mentioned recessions. There were extraordinary circumstances that brought the expansion to halt. Then a new economy rose out of the bust each time.

My personal philosophy is that economies expand over very long periods of time by way of boom and bust cycles. I think Hyman Minsky's Financial-Instability Hypothesis** describes it best.

So I see the pandemic shutdown as the 'bust' part of the cycle. It wasn't a classic economic shock or miscalculation. It was an exogenous shock which fundamentally changed the economy.

Could the expansion have continued for longer if not for the pandemic? Yes, of course. Is this an interruption? I say no because everything has fundamentally changed. So Minsky Cycle or exogenous shock, the end result is the same. Boom 'n Bust. That's just the way it works!

If there's a silver lining to all this it is that we will witness how an expansion evolves starting from zero. It will also give us the opportunity to see how far the Fed can push-the-envelope and then unwind without crashing the economy.

I might add these were the same worries expressed after the extraordinary Fed actions after the 2008 credit crises.

Your wide-eyed Fool,
FM

* https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

** https://en.wikipedia.org/wiki/Hyman_Minsky#Financial_theory
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Retail sales for August were at an all-time monthly high, up 5% year-over-year and up 2% from the previous high in January.

https://finance.yahoo.com/news/wrapup-1-u-retail-sales-12364...
Retail sales jumped 1.9% last month as consumers bought motor vehicles and clothing, dined out and splashed on hobbies, the Commerce Department said on Friday. That followed an unrevised 0.6% increase in August. Economists polled by Reuters had forecast retail sales would rise 0.7% in September.

DB2
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Retail sales jumped 1.9% last month...

Why the U.S. economy didn’t fall off the fiscal cliff
https://finance.yahoo.com/news/why-the-consumer-us-economy-n...
As emergency stimulus programs targeted at consumers expired, something unexpected happened: people kept spending....Piecing together the government data, it seemed to be the case that consumers put much of their stimulus money away and have recently been drawing from those savings. Data released this week confirms that consumers were very aware of what they were doing.

The New York Fed surveyed 1,200 households....Of the stimulus money that went out, 29% was spent, 35% was used to pay down debt, and 36% was put away in savings. The New York Fed did another survey in August and asked what consumers would do with a potential second round of stimulus checks. This time, respondents said they would spend 24% of it (about 14% on essential items and about 7% on non-essential items). Those respondents also said 31% would be used to pay down debt while 45% would be saved....

First, this propensity to pay down debt and save suggests some spending may be pent up. “The stock of savings accumulated since March suggests substantial upside risk to the economy,“ University of Oregon professor Tim Duy wrote this week in response to the New York Fed’s findings. “The possibility of a fiscal package after the election is another upside risk to the economy.“ Add to that a widely vaccinated population, and you may really see the spending floodgate open.

DB2
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So they should only get the percentage of the stimulus that they have been spending and using to pay down debt, but not the portion that they are saving (at taxpayer expense)?

Not suggesting, but just asking.

Jeff
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