"In the Tank Forever": U.S. Consumers, Retailers in a "Death Spiral," Davidowitz Says

Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.

Rather than summarize, let me just highlight some of his best one-liners:

On retail:

• "The retail business is terrible... It's almost all negative."
  
• "We're going to close hundreds of thousands of stores."
  

On the consumer:

• "They’re still over leveraged, they're losing jobs, their credit has been cut back."
  

On America:

• "We are in the tank forever. As a country we are out of control, we're in a death spiral."
  

On the stock market:

• "We're in terrible shape. That's what the fundamentals tell me. I can't explain the stock market."
  

But it's not all gloom and doom, believe it or not. Davidowitz, who runs a retail consulting firm Davidowitz and Associates, thinks certain discount retailers, grocers, drug store chains and a select few department stores can survive and prosper in the future.

Most notably he likes the "extreme discounters" like Family Dollar, Dollar Tree (which was up almost 5% Tuesday after the company raised its outlook) and 99 Cents Only Stores. And, in the department store sector, he says, Kohl's will "be the only winner" because of their cost controls.

Source

Ok so is this guy just someone to ignore or should we listen to him?
Well who is he?

Prior to founding his own firm in 1981, Mr. Davidowitz was a Principal at Ernst (now Ernst & Young) where he was Director of National Retail Consulting Services and Chairman of the Retail Committee.. He has a B.S. and M.A from New York University and resides in Manhattan.

As a retail expert, he appears regularly on Bloomberg ( TV and Radio), Fox News, CNBC, CBS, NBC, ABC, MSNBC, NPR Radio and a number of other U. S. and Canadian TV and radio outlets. He is frequently quoted in the national and regional business press including The Wall Street Journal, Business Week, The New York Times, Forbes, Fortune, Investors Business Daily, The Washington Post and a host of other newspaper, business and trade publications.

The firm has worked with numerous investment firms with retail interests, including Banker's Trust, General Atlantic, M & I Bank, Meridian Bank, Normandy Asset Management, Odyssey Partners, Trump Group (Julius & Eddie Trump) and Vornado.
Segments served include retail and retail-related organizations of all types and sizes:

DEPARTMENT
Alexanders
Argesingers
Arnold Constable
Boston Store
Bullocks (Federated)
Cox's (TX)
Cox's (PA)
Crawfords
Diamonds (Dayton Hudson)
Epstein's
Gottschalks
Goudchaux
Greens
HC Prange
Hess
Hewes Bros.
Higbees
Hudsons (Dayton Hudson)
J. Byron
Liberty House
LS Good
Maison Blanche
Marshall Field's
Martins
McClurkans
Mervyn's
Orbachs
Outlet
Parisian
Perkins
SP Dunham's
The White House
SPECIALTY APPAREL
Added Dimensions
Ann Taylor
Balliet's
Barbara Moss (Moray)
Bon Worth
Brauns Fashions
Casual Corner
Cato
Cherry & Webb
Clothestime
Colony Shops
Craigs
Dalmys
Davids
Dawahares
Don Levy
Dress Barn
Fashion Cents
Fashion Conspiracy
5-7-9 Shops
Franklin Simon (City Stores)
Goldring
Imagine
Jack Winter
Jeans West
Joseph Magnin
Junction House of Jeans
Lerner
Limited
Madison's
Mandy's
Mangels
Martha's
Maurices
Merry-Go-Round
Miller's Outpost (Hub)
Miller-Wohl
Miss Jackson's
Modern Woman
Motherhood Maternity
Narragansett Clothing Co.
No Name
Ormond
Petrie
Pic-A-Dilly (Lucky)
Reynolds
Ritz Department Stores
Roamans
Salkin & Linoff
Sheplers Western Stores
Sidneys
Strawberry/Chuckles (A & E)
The id
The Lodge
Thimbles
Ups & Downs
WR Grace
You & You Stores
Yielding's
OTHER
Ace Hardware
Amcena
American Regitel
Associated Merch. (AMC)
Burroughs
Chicago Holdings
Child World
Consumers Distributing
Dank's
Dansk
Duane Reade
Eastern Mountain Sports
Edison Brothers
Evans Fur
Federated Group
Fortunoff
GranTree Furniture
Itel
Kays Home Center
Ketchum & Co.
Klein Bros.
KMGA
Knogo
Lamport Company
Lechters
Levy Brothers
Marvella Pearls
Menswear Retail of Amer.
Modern Age Furniture
Mutual Buying Syndicate
Neisners
Oshman's Sporting Goods
Panelrama
Pep Boys
Pitney Bowes Alpex
Rack Room
Schweber Electronics
Seiko Corp. of America
Seligman & Latz
Ski Haus
Spencer Gifts
The Handyman
Toys R Us
United Sporting Goods
US General Supply
Wherehouse Entertainment
Wolverine Worldwide
W & J Sloane (City Stores)
GROCERY
Bashas Markets
Copps
Big Bear
Waldbaums
MENSWEAR
After Six (Morville)
B & B Lorry's
Bartman & Bixer
Bond Stores
Eagle Clothes
Hamburger's
Howard Stores
Hughes & Hatcher
Kennedy's
Julius Lewis
Paul Stuart
Phillips Van Heusen
Robert Hall
Webster Clothes
JEWELRY
Belkeith Jewelry
Edison Jewelers
Finlay Fine Jewelry
Fortunoff
Georg Jensen
Haltoms
Harry Winston
Spritzer & Fuhrman
Van Cleef & Arpels
DISCOUNT
Ames
Ann & Hope
Apparel Buying (Woolco)
Bargaintown USA
Caldor
Fishers Big Wheel
Interstate Dept. Stores
Kings
Kmart
Prangeway
Rinks
Rockower Bros. (Woolco)
Schultz Bros.
Sterling Stores
Target
Two Guys (Vornado)

davidowitzassociates.com...

Yes I'd say he knows exactly what he's talking about, probably more than most.



[edit on 28-8-2009 by warrenb]

reply to post by Rockpuck


Great responses Rockpuck!

Is it so hard to understand that our way of life is flawed and doomed to fail?

When an entire society is based on debt all that can happen is an over load leading to a collapse.

It's a cycle.

Edit: There is a reason Greed is considered a sin.

[edit on 8/28/2009 by Tentickles]

reply to post by hotrodturbo7

Who would facilitate this?

Central/South America, that's my bet anyways.

reply to post by getreadyalready

The part of "Green" that I though could save us is an entirely new energy source not dependent on fossil fuels. You are correct about just changing from dirty industries to green ones, but I am referring to something entirely new.

Right, but does energy generate wealth? .. No, it does not, it's a Service.. it cannot be exported unless it's tangible like Oil. And I seriously doubt a new found oil replacement will be found. Free energy is possible, dirt cheap energy is possible, but neither will be exported, and both would destroy the economy by eliminating hundreds of thousands, to millions of jobs. Trust me.. just look at Spain.

The only way production can honestly sustain a new economic expansion based on wealth is to wage Total War, destroy a good portion of Societies and then export the material to rebuild those societies.

Otherwise there is no natural course to start producing.. wages are to high, taxes are to high, the fact that there are no Tariffs anymore is horrible.. The only other viable solution is to wage an extremely aggressive trade war, end all free trade, and tax the crap out of imports, but even that, while it would reset the demand for imported goods and raise production at home, would lead to a horrific depression World wide that honestly I don't think we could make it through.

reply to post by Tentickles

Is it so hard to understand that our way of life is flawed and doomed to fail?

Considering the Generation in control of our Government has not lived through a major economic downturn, I don't find it surprising that there is a strong "that can't happen here" mentality in regards to our financial situation.. People are used to 6 months recession were we have a small bump in the road before the next big bubble. To find ourselves currently bubbless is unique, I suppose.

Edit: There is a reason Greed is considered a sin.

Indeed, and here you and I are paying for the sins of our fathers. Lovely World, aint it?

reply to post by Rockpuck


Hey Rockpuck, can i please get your stance on Lyndon Larouche. Nobody will give me an opinion on this guy, he seems like he knows his history in and out, and economics the same, yet I haven't seen anything on ATS regarding him... www.larouchepac.com...

Just looking for some opinions on his plan for the U.S.

reply to post by Jazz87


I don't really know much about him, but just from going over some of his articles he seems like a very angry person...

Anyways, if his economic hypotheses are in line with mine then he is simply following the logic of laissez faire economics.. The Fundamentals of Capitalism cannot change, however, you can bend how it appears so that you can see perpetual wealth, while the fundamentals scream in protest. Most of this guys writings are commentary on historic economist who warned against the effects of usury, at least in the manor it was being used. Usury can be beneficial, or it can be poisonous, it's poisonous when you try and build an economy around Usury, and not Usury around an Economy. It's fundamentally flawed.

If you want to read a GOOD economist (and very well respected) read up on Peter Schiff www.schiffforsenate.com...

In case no one new, he also happens to be running for Senate... Imagine, Paul and Peter Schiff in Government together, taking over Washington one sensible person at a time! (albeit, different houses) .. I would hate to be Bernake to face his questions..

He believes that, out of 100 members of the US Senate, at least one should have real world experience in finance and economics.

[edit on 8/28/2009 by Rockpuck]

The simple fact that our government is lying to us should make Americans want to rise up and protest, violently if need be. It's insulting that our government doesn't trust the people enough to tell the truth. It's really time Americans rise up and demand a new President, A new congress, a new Senate, new governors, new state legislatures. Kick everyone the fock out! Get new ideas, fresh, young blood who care about the people. Who aren't bought and paid for after decades in Washington. It's also time Americans rise up and start demanding an end to the lavishness and gluttony that goes on in corporate America. These multimillionaire/billionaire CEO's have been robbing Americans for decades. These companies should have been left to go bankrupt! I mean how much more anal raping are Americans going to take before they stand up and fight? Because that's what it's akin to.......it's like someone coming into their house telling them to grab their ankles and well you know the rest.............I guess Americans like taking it up their ass!

reply to post by Rockpuck


Ron Paul, Peter Schiff, Jesse Ventura. These are the people that need to be in the White House. But thanks to our outdated and corrupt Electoral college system it's impossible for a third party to ever win let alone make it very far in a national election.

reply to post by Zosynspiracy


The electoral college isn't the issue.. (considering we are not a Democracy, we are a Republic, and we do not elect the President, the States do) .. it's simply a matter of caring, that is what the issue is. People simply don't give a damn.

reply to post by Tentickles


Hrmmm the guy says that consumer spending is 70% of the economy....

What is the other 30% composed of?

What's scary is the man saying.. "Any bright spots? Cat food? Pasta?"

Evidently he knows how people move to cat food in tough times....

[edit on 28-8-2009 by HunkaHunka]

reply to post by HunkaHunka


Consumption being 70% of the GDP is more or less the every day transactions of Americans. The internal fluctuation of wealth that in theory generates new wealth.

Other aspects would be investment, the percentage of our money that goes into investing new businesses, current businesses, real estate or what have you.

Another aspect would be Government consumption, which is a different component to Personal Consumption

And then there is Exports, which produces the smallest portion of our GDP (Roughly 5-7% of our GDP)

Interestingly this can be subdivided..

For one, according to the 2004 Consumer Expenditures Survey www.bls.gov... 65% of our personal Consumption is spent on Housing, Food, and Transportation ... none of which is counted in Core Inflation (CPI) ..

According to the Bureau of Labor Statistics in 2004 $43,395 was the average amount spent by households. In 2004 the average income was approx $36,000-50,000 minus the top 2% of the population earning over 250,000en.wikipedia.org... There was literally no wage growth from the time period 1999-2004.

What we can reduce this to is that Americans spend more than we earn, and our wage growth for the bottom 98% of the population is stagnate, meaning the majority of consumption increases was the product of credit. That 94% of our Total GDP is internal wealth circulation and that in the current state of credit disappearing and stagnate wages, consumption on the Personal level has been severely deteriorated.. meaning someone has picked up the slack since our GDP only fell marginally -- that would be Uncle Sam spending like mad. No Government can exist that is the sole provider of most of our GDP .. you cannot spend you're self into prosperity.. it simply doesn't work that way.

Excerpt from "Rail Time Indicators"

United States Railway Traffic
Year over Year Change, 2009 to 2008 (July)

Agricultural & food products: -18.10%
Grain : -22.90%
Farm products excl. grain: -26.50%
Grain mill products (1) : -8.30%
Food products: -13.60%

Chemicals: -16.40%
Chemicals: -16.80%
Petroleum products: -14.70%

Coal: -8.70%

Forest products: -27.80%
Primary forest products (2): -32.40%
Lumber & wood products: -38.20%
Pulp & paper products: -20.90%

Metallic ores and metals: -51.20%
Metallic ores (3): -58.10%
Coke: -28.40%
Primary metal products (4): -54.30%

Motor vehicles & parts: -49.10%

Nonmetallic minerals & prod.: -23.10%
Crushed stone, gravel, sand: -22.80%
Nonmetallic minerals (5): -25.10%
Stone, clay & glass prod. (6): -22.40%

Other: -25.00%
Waste & scrap materials (7): -36.80%
All other carloads: -0.50%

TOTAL ALL CARLOADS: -19.00%

Notes:
(1) - flour, animal feed, corn syrup, corn starch, soybean meal, etc.
(2) - wood raw materials such as pulpwood and wood chips
(3) - overwhelmingly iron ore, but some aluminum ore, copper ore, etc.
(4) - primarily iron & steel products; some aluminum, copper, etc.
(5) - phosphate rock, rock salt, crude sulphur, clay, etc.
(6) - cement, ground earths or minerals, gypsum products, etc.
(7) - scrap metal and paper, construction debris, ashes, etc.

www.aar.org...

[edit on 28-8-2009 by RoofMonkey]