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.

Retail Technology

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 on the effects on businesses but the large-scale firings when those stores close. How many might lose their jobs?

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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.

 

The Red Warning Flags In Today’s Employment Report

Summary: the key things to know about today’s job report.  (Second of two posts today.)

  • The December job numbers show that nothing has changed.
  • The US economy remains locked in slow gear, slowly slowing.
  • The exciting stories about growth are mostly noise or cherries picked from the flood of economic numbers.
  • Combined with a hawkish Fed and high valuations = a dangerous market for investors.

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Three important things to see in today’s jobs report

The monthly jobs report creates a flood of exciting news stories.  Most of these discuss small fluctuations in its many numbers, most of which are just statistical noise. Here are three things you need to know about job and wage growth. They are the key trends seldom mentioned in the news.

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The Important But Hidden News In The Jobs Report

SummarySlow Economic Growth

  • Jobs continued their trend: a long period of slow growth, second weakest since 1961 (2001-07 was worse).
  • Worker’s wages continued their slow growth, weekly wages up 2.1% YoY for private sector hourly workers.
  • Slow growth doesn’t create the imbalances & inflation that cause recession. This could run for another year, and perhaps longer.
  • Such slow non-inflationary growth makes raising rates a risky play for the Fed. I doubt they will be so bold.
  • In this slow growth environment paying big valuations for stocks is risky gamble.

The monthly employment report is the most important economic report. It is central to our consumer-led economy, relatively accurate, and frequent (unlike GDP). The November report frustrates both bulls and bears. Still more slow growth in jobs and wages. No signs of boom, no signs of bust, no signs of inflation. Boring, but rich with implications for investors.

As usual, the chart tells the tale. This is the YoY percent change in jobs from the Establishment Survey, not seasonally adjusted (NSA). The purple line is the 1.6% growth reported today. Growth peaked at 2.3% in February 2015 and has slowed steadily since — but gently. Click to enlarge.

Employment growth through November 2016

Contents

Why look at the NSA YoY percent changes? What about the horrific numbers from… Aren’t most of the new jobs low-paying? What about the recession that was coming? Why are investors paying such high valuations for stocks?

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