OPINION – By definition a recession is a decline in economic activity for six months. Economist won’t say recession until we have actually gone through it or in it. Since, I’m no economist I’m going to say it: “Recession.” I believe we are in a recession, here are my reasons why.
DOW JONES AVERAGE, S&P 500 and NASDAQ are all down at least 11% in the last 6 months. Usually investors are optimistic in the beginning of the year and the market usually goes up. But; not this year. This is the worst stock market performance in January EVER!!! It beat out 1929, 1987 & 2008. EVER!!!
Target announced in November that growth was slowing down. Nordstrom also announced that their sales are down. Despite Nordstrom Racks are being built next to every Starbucks in the country, don’t be fooled. Macy’s announced this month they are closing 36 stores. Can you imagine if you heard Walmart was closing? No Way! Well Walmart announced in January they are closing 154 U.S. stores. Some people try to avoid the situation saying “everyone shops online,” but you can’t tell me that everybody is buying their toilet paper and soap from Amazon.
With the announcements of Macy’s and Walmart closing there is a ripple effect. The employees will no longer have a job. A person’s job being a vital element in the sense of the responsibilities one has in order to care for themselves and their family. But; they are not to be considered. A huge empty building where Walmart and Macy’s used to be, will become an eye sore for the shopping center/mall. It causes less people to go to those centers. Which means business sales will go down. A lot of those businesses are small businesses. The final ripple effect is the mall and shopping center value would go down.
Have you noticed retail numbers are down? Well they are and you would think retail profit would go up. The reason being is the cost of transporting clothes, toilet paper, toothbrushes and other goods to the store has gone down due to gas prices dropping. Yet; they are struggling.
Speaking of gas prices going down. Why aren’t people spending or saving the difference from it? It’s because people are paying more for housing & health care.
Even though we all love the drop in oil prices. Imagine how many people in United States who work in the oil industry are laid off since it’s too expensive to produce oil in the US now. In South Dakota and Wyoming they were booming towns of people working the in oil fields. Making great money. Being able to buy a new car and new home. Now those areas are a ghost town.
There are signs that there is a hole in Silicon Valley Unicorn mania. (Silicon Valley Unicorn is a startup business valued over $1 billion). As many of those companies have been devalued, 4th quarter venture capital money dropped more than 10%.
If this is as bad as it gets, it’s not that bad. Will it get even worse I don’t know. But; if we look at the last two recessions in 2000 and 2008 this could be just the beginning.