Economics: and the forthcoming DEPRESSION(2)

1. 
   
2. According to Robert Reich, former Clinton Sec'y of Labor,

The only measurable number that can be taken from the great depression of the last century, is that there was 25% unemployment, as opposed to our average unemployment numbers between 3 and 9% in the last century.

At 25% unemployment: A Hypothesis....

* Let's pretend that the average enclosed mall in anytown, usa has 100 stores
(most have more!)
* Let's pretend the average store has 3 fulltime (Managers) and 14 part time
employees
* Let's pretend the average 14 time part/time employees equals 7 full time employees.
* Let's pretend the average store thus has 10 full time employees.

Now.
Let's look at a couple of national Chains..
1) The Gap: consists of
a)The gap b) Baby Gap, c) Old Navy, and two other brands I can't remember.
b) let's pretend that's 5 stores in ONE mall.
2) Hot Topics = Hot topics & Torrid stores (2 stores in same mall)

for a quick overview of the bankruptcy of Retail chains, see this article in today's NYTimes Here

Now (using ONLY the numbers in this article, we come to this quick chart I put together...
Chain Estimated # of store closings
=======================================
Linens ‘n Things, 500 stores
Foot Locker 140 stores,
Ann Taylor 117stores
Zales 100.stores
Bombay, 360 stores
Lane Bryant 75 stores ---same owner
Fashion Bug 75 stores.---same owner
Wilsons/Leather 158stores
Demo 153-stores
Sharper Image 184
----------------------------------------------
1862 stores

OK... so we see a list of 1800 RETAIL shops closing over the next year or two...

let's take that number and multiply by our estimates of 10 equivalent F/T employees Per store..

Roouuh-ohhhh,,,
1862+say another 5% for 'home office employees' (93) equals almost 19,55 employees OUT OF WORK...

Now take this lovely line in the article,

The International Council of Shopping Centers, a trade group, estimates there will be 5,770 store closings in 2008, up 25 percent from 2007, when there were 4,603.

Let's take that number (5770 * (10/store)*
57,700 workers plus 5% home office employees (289)=57,989 round up to 58,000 employees OUT OF WORK...

Now add the past # (19,055+58,000)=77,000 out of WORK employees.

let's go sideways 5770 stores plus 1862 stores = 7,632 stores closing...

7632 stores divided by our hypothetical 100 stores per mall= 76.32 malls

Imagine your local town...

Imagine that 76 malls become...FULLY EMPTY... WITH NO stores in THE MALL.

Now what happens??

Call it TRICKLE DOWN Economics....

1. The local coffee shops and Dunkin Donuts and Starbucks get less customers.
2. The entire (let's presume local) population that worked in the Mall are OUT OF WORK.
3. The number of remaining stores are NOT hiring, or not absorbing THAT many people
4. The 76 malls need to declare bankruptcy
5. What do local governments do?

Imagine retraing 76,0000 people....

And we say 25% unemployment (the only measurable number according to Robert Reich)
is a far fetched number today??

I say... We've screwed ourselves.... And that's only ONE reason we need this 'another' New deal to Save Our Society...

your opinion always welcome...

Mark Brown...

PS: and I wish I could say I was overly pessimistic, I have been telling folks about this for almost a year, and just found the article about retail bankruptcies today