The Retail Apocalypse Continues
The Retail Apocalypse Continues. A new report out earlier this week estimates that 20,000 to 25,000 retail stores of all sizes will close in the next 12 months. The ongoing coronavirus pandemic is one part of a bigger story of the problems brick and mortar retail stores are experiencing.
More Job Losses
Retail is the single biggest employer in the US. There is an estimated 15 million people of all ages working in small, medium and large retail businesses. This also includes all restaurants, bars and fast food joints. As the big box retailers continue to sink into bankruptcy where are all of the workers going to find new jobs?
The Ripple Effect
The coronavirus has affected more than just businesses. Many small states are feeling the double whammy of high unemployment and lower taxes receipts. In Arizona the state is looking at a one billion dollar hole in the budget due to the spike in unemployment. The numbers are gradually going down from their highs. At least half of the people that were let go or furloughed have no job to return to because of businesses closing. Many states reduced or eliminated state income taxes choosing to fully depend on sales taxes to fund the government. Sales taxes are at the lowest since the great recession. It is not just sales taxes that are lower. Gas taxes haver also dropped since no one is driving to work.
What is Next?
If you remember the 2008 economy it will be similar. States will have to cut services, social programs and education funding. The Fed, CBO, European central banks and the International Monetary Fund are all predicting a recession until at least the end of 2021, perhaps longer. Before your favorite clothing store or local shop closes now may be the time to buy that shirt, blouse or pants you like. The same for shoes and underwear. If nothing changes the only places that will still be open are Target and Wal-Mart. The Retail Apocalypse Continues