The new industrial revolution hits retail: prepare for mass firings.

Summary: The new industrial revolution will have its greatest effect on industries that have large imbalances. Like retail, after decades of overbuilding stores. Lots of jobs will be destroyed. Watch closely, other industries will be hit with similar shocks.

Hayley Petersen at Business Insider points to the next wave of the industrial revolution: “The retail apocalypse has officially descended on America” —

“Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades. More than 3,500 stores are expected to close in the next couple of months. Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.

“Some retailers are exiting the brick-and-mortar business altogether and trying to shift to an all-online model. For example, Bebe is closing all its stores — about 170 — to focus on increasing its online sales, according to a Bloomberg report. The Limited also recently shut down all 250 of its stores, but it still sells merchandise online. …Sears is shutting down about 10% of its Sears and Kmart locations, or 150 stores, and JCPenney is shutting down about 14% of its locations, or 138 stores. …

“The real-estate research firm Green Street Advisors estimates that about 30% of all malls fall under those classifications. That means that nearly a third of shopping malls are at risk of dying off as a result of store closures. According to many analysts, the retail apocalypse has been a long time coming in the US, where stores per capita far outnumber that of any other country.”

Petersen understates the situation for retail stories, overlooking the inevitable bankruptcies (Sears might be the next to go). As a modern business reporter, she mentions the effects on businesses but not the large-scale firings when those stores close. How many might lose their jobs?

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Single payer healthcare is coming to America. It’s inevitable.

Summary: Conservatives’ bold propaganda have made Americans fear the health care systems of our peer nations, systems that produce equivalent care a half the cost (or less) or ours — but cover everybody. America’s march to universal coverage began with Medicare (1965) and Medicaid (1966). Obamacare expanded it, covering more people but at unsustainable cost. Here Ed Dolan looks at the facts and draws the obvious conclusion: single payer insurance will come to America. The longer we wait, the more difficult the transition.

Health Care Reform

Single Payer Healthcare is Coming.

Stop Fighting It.
Start Figuring Out How to Make It Work.

Guest post by Ed Dolan.

As everyone knows by now, the United States is alone among advanced economies in not having a single payer healthcare system with universal coverage. It is, however, already much closer to such a system than most people realize, and the current round of Republican healthcare reforms, if enacted according to plan, will bring it even closer. Yet there is no reason to fear the single payer future. Read on.

The true scope of government in our healthcare system.

The federal government already operates three large healthcare systems, Medicare, Medicaid, and the Veterans Administration. Each of the first two is comparable in size to the single payer systems of most European countries. If we categorize healthcare expenditures by the type of primary payer, the three big federal programs accounted for roughly a third of all spending in 2015, according to data from the Centers for Medicare and Medicaid Services:

Who pays for health care?

To get a true picture of the government role in healthcare, though, we need a different perspective. If we categorize expenditures by the source of the funds, instead of the type of payer, the government share of spending is much larger. Partly that is because state and local governments account for 17 percent of all healthcare spending, not fully reflected in the chart above. Also, that chart hides the extent to which federal tax expenditures finance much of our ostensibly private health insurance. According to data from the Tax Policy Center, deductions and exclusions of health insurance premiums and related tax breaks cost the federal government some $250 billion in revenue in 2015 — as big a burden on the federal budget as if Uncle Sam wrote a check for that amount.

Deductibility of employer healthcare expenditures account for about three-fifths of total tax expenditures. The remainder come in the form of exclusions of Medicaid benefits from declared income, deductibility of insurance for self-employed individuals, tax breaks for some kinds of out-of-pocket costs, and other items. If we categorize healthcare expenditures according to the ultimate source of funds rather than the primary payer, we find that government budgets account for over half of all spending, as the next chart shows.

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Surprising revelation: Janet Yellen reveals why the Fed is raising rates!

Summary: Usually we can only guess at the motives of our senior officials. But on rare occasions they give us clues to their real priorities and objectives. The Fed is especially opaque, so we speculate about their odd rate increases during a slow and slowing economy. Yesterday Janet Yellen explained why. The answer is shocking (to those who do not know the Fed’s history).

Seal of the United States Federal Reserve Board


From TIME’s transcript of Janet Yellen’s press conference, where she explains why the Fed raised rates in a slow economy. Bloomberg reporter Kathleen Hays asks why. The answer should be read by every citizen. Yellen confirms the suspicion long held by many of us: the Fed serves our corporate rulers. Among other things, they fight “wage inflation” — aka workers sharing benefits of America’s rising productivity.

This transcript has been lightly edited for clarity.

Kathleen Hays


Hays: I’m going to take the opposite side of this, because — and this question about market expectations, and how the markets got things wrong, and then how you say the Fed suddenly clarified what it already said. But if you look at the Atlanta Fed’s latest GDP tracker for the first quarter, it’s down to 0.9 percent. We had a retail sales report that was mixed. …the consumer does not appear to be roaring in the first quarter …

If you look at measured of labor compensation, you note in the statement that they’re not moving up. …And you yourself said …that is perhaps an indication there’s still slack in the labor market.

…What happened between December and March? GDP is tracking very low. Measures of labor compensation are not threatening to boost inflation any time fast. The consumer is not picking up very much. Fiscal policy, we don’t know what’s going to happen with Donald Trump. And yet, you have to raise rates now. So what is the motivation here? The economy is so far from your forecast in terms of GDP, why does the Fed have to move now? What does this signal, then, about the rest of the year?

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So many open jobs for truck drivers! It’s another bogus skills shortage story.

Summary: Today we learn about all those open jobs for truck drivers, waiting for lazy Americans (or more immigrants) to fill them. It is another bogus “skills shortage” story, revealing much about how America is changing.

The road to larger trucking industry profits.

Trucking Industry Profits

The plutocrat revolution against America has many fronts. One of the most important is their ongoing program to hammer down wages and boost profits. One aspect of that is their propaganda campaign to convince the public that there is a labor shortage. Today’s example: “Truck Driver Shortage Analysis 2015” by Bob Costello and Rod Suarez (Chief Economist, Economic Analyst), American Trucking Associations — Opening…

“Over the past 15 years, the trucking industry has periodically struggled with a shortage of truck drivers. The first shortage during this period was documented in a 2005 report. At that time, the shortage was roughly 20,000. During the last recession starting in 2008, the driver shortage was eliminated as industry volumes plummeted, resulting in fewer drivers needed. However, as industry volumes began to recover in 2011, the shortage slowly returned. The driver market continued to tighten and the shortage skyrocketed to 38,000 by 2014.

“There are many reasons for the current driver shortage, but one of the largest factors is the relatively high average age of the existing workforce. The current average driver age in the OTR (Over-the-Road) TL (Truckload) industry is 49.

“…If the current trend holds, the shortage may balloon to almost 175,000 by 2024.

The ATA lists five causes of the “shortage”: aging workforce, gender (too few women drivers), drivers have a difficult lifestyle, better jobs available, and too many regulations. The ATA has recommendations, which include government action to boost truckers’ profits. Given the high accident rate of 18-20 year-old young adults, this is quite mad. But profits matter more than lives to our owners.

“Lower Driving Age: Interstate driving currently has an age minimum of 21. The 18-20 year old segment has the highest rate of unemployment of any age group, yet this is an entire segment that the industry cannot access (with the exception of local routes, which is generally reserved for seniority). Additionally, potential drivers are likely to have found another career path (that they are already 3 years into) by the time they reach 21.”

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Today’s Job Report Shows The Madness Of Our Situation – Ignore At Your Peril

Summary: It’s time for the monthly festival of misinformation about the jobs report! The report must be described as exciting in order to generate trade commissions for brokers, clicks for journalists, and triumphs for politicians. Here’s the bottom line (it’s more interesting than the spin).  This is the second of today’s posts.

Job Growth

  • The first estimate of February’s employment growth: 235 thousand. That’s down slightly from January’s gain of 238 thousand, and slightly above Street expectations.
  • More usefully expressed, the number of job rose in February by 2.0% SAAR, the same as in January. That’s slightly above the average of 1.8% during the past 5 years.
  • Wage growth for workers was 2.2% SAAR, slower than the 2.5% YoY – and below inflation rate of 2.5%.

The bottom line: more of the same in February. No change of trend. Don’t buy the hype. To see the interesting and important insights in the February jobs report, read the full post at Seeking Alpha.


A stagnant economy and a booming stock market, destined to realign eventually

Summary: Nothing has changed during the past year, except that the US stock market has zoomed to near-record valuations, With no visible support in Fed policy, or corporate and economic fundamentals. The economy remains locked in slow growth. The exciting growth stories are mostly noise or cherries picked from the flood of economic numbers. Are investors hoping Trump will defeat the fiscal conservatives in Congress and sign a massive stimulus program? It’s a risky bet.

Jigsaw puzzle mismatch

One amazing aspect of this US expansion cycle is its stability: slow steady growth despite large political and economic changes, foreign and domestic — combined with persistent (almost delusional) expectations for accelerating growth really soon. Another amazing aspect is the combination of slow economic growth and profit growth with high equity valuations. How long can this discordant picture continue?

None of this is difficult to see. At the beginning of every month I post a brief look at graphs of the economy. The conclusions are almost too obvious to state. Let’s do it again. The fantastic gap remains, waiting for the event to bring the economy and stock market back into alignment.

See the rest of this article at Seeking Alpha.

A powerful defense of free trade by Ed Dolan, before Trump attacks it

Summary: Trump and other opponents of free trade make many bold claims about its harmful effects. Here Ed Dolan looks at the facts to see if they agree with Trump. That is nice to know before Trump attacks the global trade system, a pillar of the world order that has brought unprecedented prosperity to the world.

World trade

In Search of the Elusive Victims of Globalization

Guest post by Ed Dolan.

The 2016 US Presidential election has placed trade policy high on the national agenda. Both Bernie Sanders, on the Left, and Donald Trump, on the right, campaigned on overtly protectionist platforms. Now that Trump is in office, he has begun implementing his program of “buy American, hire American.”

In response, many members of the economics profession, always a bastion of free-trade sentiment, have taken a new look at something they always knew but did not always like to talk about: the fact that trade creates winners and losers. In a widely cited paper, “The China Shock,” David Autor and colleagues shows that the losses from trade shocks to the US economy are larger and more persistent than many had thought. Such research makes it understandable how politicians can assemble victims of trade shocks into winning coalitions.

Although Trump and Sanders have directed most of their critique of global trade at the way it creates losers in the US economy, other critics are more concerned with the effects on US trade partners. Taking advantage of the media attention drawn by their sometimes disorderly protests against the Seattle meetings of the World Trade Organization in 1999, these critics emphasize that trade creates victims in poor countries as well as rich.

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