Are we seeing early signs of our next recession?

[busymom]

First ToysRUs is going down, now BonTon department stores has announced they're filing Chapter 11.  Your thoughts?

[swamp]

Amazon. 

[midjd]

New recession, I doubt it. I don't think shopping malls and big box stores ever really emerged from the last one. (The death of Bon Ton is going to put the final nail in our local mall's coffin, it was down to 2 anchor stores (including Carson's) after JCP and Sears left last year... but it had been in a pretty sad state since we moved here in 2011.)

I think that if developers think outside the box and work on redeveloping these buildings, they'll come out of it. There is a big push to convert a lot of old mall space into apartments or college campuses.

Full disclosure, looking at blogs that feature dead/dying malls is a weird hobby of mine. 

[Ryan]

Don't think that ToysRUs going bankrupt is because of the economy, that's probably been a long time coming.  

[bean29]

Bon Ton has been struggling for a long time too. My Mom mentioned it to me this weekend and said it is her favorite store, it pretty much is mine too. If Bon-Ton goes down, I don't know what store I shop at instead. I really don't buy clothing at Macy's. I strongly dislike Kohl's.

Rising interest rates is the biggie. If we concentrate more heavily on debt pay down, it will put more stress on sales. I have 10 years to payoff my adjustable rate mortgage on my rentals. We want to keep one, the other one, we just were waiting until we could pay the loan off with the sale of the 2nd. We are pretty much there, maybe another year or two.

[thyme4change]

Toys R us has been a mess for a full decade - too much debt from the LBO.

Department stores in general have also been failing. Maybe the upscale ones are hanging in there, but Dillards and Macy's and such are just not where people shop anymore. They are the jack of all trades, master of none.

A recession might be coming, but these types of retailers are not the indicator. That is just a sign of an industry going through a permanent transformation.

[AgeOfEnlightenmentSCP]

I'll give you an example of a retail purchase I just made (for my business- which is growing by leaps and bounds): First, I researched the item online- stumbled on to a superb YouTuber who did an amazing in-depth review of the product. Next, I went to two "big box" retailers in search of the item for a more hands-on look at it / test use. Turns out- the retailers didn't even have the item I was looking for (Best Buy and Sam's Club). Ended up getting it (Vlogging Camera, mic, spare batteries, carry case, and ScanDisk card) in a bundle for far less than advertised at other retailers at B&H Photo online- so I quit shopping and just ordered it.

[AgeOfEnlightenmentSCP]

Oh, point being- I can't be the first person to run into this scenario. The whole notion of sending items to a warehouse for distribution to stores where items sit on a shelf being lighted, heated, and air-conditioned while hourly employees wait for someone to walk in the door and buy them is really absurd in today's world if you think about it.

[thyme4change]

Petsmart is also in a world of hurt. They bought Chewy.com because they finally realized the problem, but they didn't merge the two businesses. I wouldn't be surprised if store count just shrinks down to zero over the next 15 years.

[Rob Base 2.0]

Yes

[countrygirl2]

Chewy,com was a great store, used to order kitties food from them quick delivery.

I heard they had been sold, last few times I ordered for her was very slow getting it,

now I guess I know why.

[Tiny]

The problems with retail have been in the works for many years, as has been noted. The way people shop today is very different from even 5 years ago.

The problem with on-line shopping is 'delivery' - this Christmas package theft seemed rampant (or to be expected). I experienced holiday time package theft a couple of years ago - and so had everything delivered to my office. Not a good solution but ok for the months of November and December.

I certainly do NOT want home delivery as the only option (there's no secure way as of now to do it) and I certainly don't want to have to haul home my purchases from the office - not to mention having it all go thru the mail room and be hand delivered to my desk.

So, I need a secure way to receive the stuff I order - when that happens I just might opt to have paper towels and cat food delivered to my door (or a pre arranged "secure" delivery place - aka a store.)

[Tiny]

as for the retail having issues being the sign of the beginning of a new recession - I don't think it is... there's plenty of retail shopping happening - just not the same ways as the past.

You could add Sears to the list of dying stores - Sears has been shriveling up for the last 10 years. I can't quite figure out why they haven't just thrown in the towel and closed 'em all down.

I think the store closures/less employment needs to hit a bunch of 'sectors' = like say fast food/restaurants AND retail AND whatever other source of employment is "main street" America (banks? car sales?) and then that would probably be something that would drive a recession.

Hmmm, was just thinking about the "store" fronts in the "mainstreet" strip malls - and it's pretty much dollar stores, fast food restaurants, banks, and insurance offices and hair cut places. I guess you can't buy car/house/life insurance or get your hair cut at Menards or some other Big Box store? My local Menards is now like a Costco with Hardware... it's one stop shopping.

[wyouser]

Times change...that much is constant, but I do not think we are on the brink of another recession. The underlying economy is strengthening.

[countrygirl2]

These stores bring on their own demise.

Our Macys is closing now, I just bought a really really nice 3 way mirror, they are selling all the fixtures too.

But this Macys and our Sears well over a year or more ago quit really having nice merchandise, when you stop

stocking what people want and need that is just going to make it go down faster. Also finding a clerk got to

be interesting so added to it. What do they expect, their business is merchandise and service, when you cease

giving good of both, well people will go elsewhere.

Since people came in here from 2 states to shop it doesn't make sense another lady and I were talking and she

said now she will have to drive to Evansville or Indianapolis from Illinois, we are talking more then 100

maybe 150 miles each way.

The town I'm talking about has universities and a population of 50 to 75000 people and drawing from the

surrounding areas.

I think Sears will be next, then maybe Toys R Us a local big furniture store is closing too. Another big problem

is the execs at the top suck these companies dry. You can't pay them millions and millions, put nothing back

into the business and expect it to be viable.

[Deleted]

I was at the mall Saturday and it was packed with people.  There were even people in Sears (always empty), JCPenney's, and Macy's.  I am starting to see inflation.  My car insurance went up 10% at renewal, even though we didn't change anything.  Other items are shrinking in size, but the prices are staying the same.  

[countrygirl2]

Sizes have been becoming smaller for years, you are just now noticing it? Got any older items around compare

there is less in the same boxes. That's inflation and everything we buy keeps raising in price.

The area was very busy yesterday, I only went into Macys. The stuff is selling out and a lot was shipped out

to other stores already. Right now its 50 and 60% off, but used to be with all the sales Macys had their

merchandise was more off then that on sales. I will miss the store. Hope others will come in, but there are only

so many big retailers around anymore so kind of doubt it. That end of the mall will be lonely.

Yes, our stores are busy on weekends too, pretty much dead during the week.  I stocked up on Merle Norman

products yesterday, my makeup, busiest I ever saw that store.

[Deleted]

countrygirl2 , I worked at a Macy's that closed. Run away from there.

They first remove the best merchandise. I worked in Fine Jewelry, for example. A lot of our stuff was shipped to other stores. Cosmetics is another area that they stripped.

Then they hire a liquidator. The liquidator has left-over merchandise from other stores. So that gets mixed in with the dept. store's merchandise.  So do damaged items, both from Macy's but also the liquidator's other stores.  Everything in non-returnable, remember.

Coupons and sales are no good. So the merchandise is actually more expensive than it was before the liquidation.

They start selling stuff in lots. Buy 1 bag of potpourri and get 3 free. That sounds great . . . If you want 4 bags of potpourri. Or if you need a dozen birthday cards that read to my sister. Or whatever.

I think my favorite purchase while they were closing was a BOG3 on sweaters. They were all cotton and I wore them until they wore out. But it was just a fluke that they came in shortly before the liquidation started.

Run away from this. It is honestly a scam.

[countrygirl2]

I know that, they shipped in all kinds of fur coats, never had them in the store.

I did pick up a couple pair of Tommy Hilfiger slacks, but everything was way higher then when

we could use coupons.

I did buy a very nice 3 way mirror off the floor, I'm sure had been there when the store opened, looked

up online and the lesser versions were $1000 to $1500 and it was $300. I'm done there not going back,

I agree with you 100%. Yes, it was a liquidator, the clerks and I were talking they told me stuff was

shipped in, again no surprise there.

In fact before I signed on to proboards today had just finished cancelling my Macys card, why keep it?

[verrip1]

Feb 6, 2018 13:47:16 GMT -5 wyouser said:

Times change...that much is constant, but I do not think we are on the brink of another recession. The underlying economy is strengthening.

The intervening month since this post has proven it to be correct.

[Aman A.K.A. Ahamburger]

Mar 11, 2018 15:53:42 GMT -5 verrip1 said:

Feb 6, 2018 13:47:16 GMT -5 wyouser said:

Times change...that much is constant, but I do not think we are on the brink of another recession. The underlying economy is strengthening.

The intervening month since this post has proven it to be correct.

I've said it before and I'll say it again; the market - especially debt - is going to hate the next cycle; but the economy will love it. Thank God a President who cares about the security of America was elected. The real reason for Trump’s steel tariffs? He’s preparing for war

Stay

[verrip1]

I sure hope not.  War has never been one of my preferred outcomes.

For further understanding of my opinion about tariffs, see the tariff thread on Your Money, OP by tractor.

[Aman A.K.A. Ahamburger]

It isn't an outcome I want to see either... But, it is what it is.

I'll have to check out that thread.

[wyouser]

Me too!

[countrygirl2]

They are saying on how he deals with these tariffs worse case could be over 800k job loss

in US. Also growth isn't even going to begin to cover these tax breaks. So far they are keeping

wages down, personally I think they will continue to do so. Not knowing what the pres strategy

is going to be, could cause the stock market to plummet at some point. I think its just a matter

of time before we go into a recession or worse.

[Jake 48]

IMO, a couple of things make me think that yes the economy is in for a major correction.

 I do fire inspections for the selling of homes, several realtors who have been around a long time have all told me the bottom falling out of this sellers market is coming and what I see for the selling prices on these homes, I cant help but wonder who the hell can afford it. mortgage rates are creeping up,My town went through this about 12 years ago, we had lay offs, budget cuts etc.. History is repeating itself

my town budget, departments are being level funded, dept. heads are asked to submit budgets with 1% increases for upcoming contract negotiations , the FD budget had money taken back and capital spending is being held at 300K

State aid is being cut by 5-600K, probably more to come 

The White House is a mess and regardless of your political views, both sides are acting liking spoiled children

Just my thoughts, not looking to entice a riot

[countrygirl2]

We have rented what 5 homes over the last couple years, multiple people wanting them. Though our

latest one is a little further out we have had fewer applicants and none really qualified. Not a good sign

at all. Our county is cutting their budget like crazy as they keep getting monies cut. Pence left us with

a huge tax cut for farmers and its hurting bad. All these school vouchers that the money follows the kid

is killing us. We have 2 school corporations in our county and one is in big trouble. You open these religious

schools and let money go for that what do you expect? Indiana is not paying teachers well so now they

are having trouble getting them, like surprise, now they are talking about hiring teachers that don't even

have a degree.  Of course all this is really going to attract industry. We are going backwards and I think a

lot of states are.

They keep saying oh when this tax cut hits people will really like it, they are still waiting. Like our CPA said

there is nothing in it that will help us or our tiny business, more smoke and mirrors.

And trump is a disaster, seems like he is purposely destroying the functioning of government in DC so he

can be the one and only, lets see is that called a dictatorship?? And congress is doing nothing to rein him

in. A recession, no I see a depression, one that likely we will not recover from in our lifetime. Hope it

doesn't take us down with it.

[thyme4change]

Claire's declared bankruptcy. Now where am I going to get 5 necklaces for 8 dollars?

[Deleted]

Feb 5, 2018 11:28:28 GMT -5 busymom said:

First ToysRUs is going down, now BonTon department stores has announced they're filing Chapter 11.  Your thoughts?

Retail is an endless cycle of modification.  It has no rules other than buyers whim.  This happens regardless of the state of economic activity, growth/recession.  I generally stay away from retail stocks.  

It's not just the two current companies you named.

www.thestar.com/business/2017/10/11/sears-collapse-will-ripple-through-the-economy.html

www.businessinsider.com/closing-stores-wont-prevent-retail-collapse-2017-4

[Aman A.K.A. Ahamburger]

Toys R Us going under is a symptom of a larger problem that goes back to the start of the debt boom in the 1980's. When Toys R Us was bought in 2005 the owners took on too much debt. The rates on the debt are fairly high‎ compared to today's; and since the recovery since the Great Recession has been the worst in the Post WW2 period,Toys couldn't keep up on this high interest loans. I mean, it's telling that dollar stores have been the retail story of the last 9 years....

The overall market has priced in coordinated global growth for years. That's what the media has been spinning until about Nov of 2017. Now, China's tru story has come to light (insane pollution, debt, corruption), the LIBOR rate has spiked because European banks have been broke since 2012 ...

I agree Verip; the tariffs are being used to strategically level the playing field of global trade. I also think some are being used to help to continued Renaissance of the American economy which I have been talking about forever. 

I know - mathematically - that a stronger US economy due to President Businesses deal making will offset the reduction of growth in China. There is also that whole problem of war which hasn't gone away...over the past 10 yrs..

It looks like the economy (oil at 65) ‎is going to be fine with the next cycle, but the market (fundamentally weak for YEARS!!!) may not be.