Monday, June 15, 2015

A Sign of Things to Come

When I look at economic news, many sources in the main-stream are are ambiguous to my frustration. I want to point at a news report and say "See, this is why the minimum wage should rise to meet inflation!"

Just take a look at today's Reuters ( 06/16/2015 ), for example:
It seems like things are doing about average, doesn't it? The Pope is talking climate change, Greek default fears are affecting Asia, Hillary is getting tough on trade, oh, and Gap is closing 175 stores. Well, that happens from time to time. It must be a problem at Gap, right? Nope.

If the market took to heart the idea that consumers must earn more money to spend more money, and the market kept wages pegged to inflation, it wouldn't be too late now.

There is no longer a margin that will allow for the delay between a wage increase and a following increase of consumer spending.

Austerity as a solution is a complete failure. Closing stores, laying off employees, cutting government spending, all have one result: Less consumer spending.

If the minimum wage were to increase to the inflation adjusted $22 per hour, consumers are so conditioned by the way the market treated them as employees that their first instinct will be to sock away their money in their savings and checking accounts.

Consumers  have been so conditioned to be miserly after 30 years of Reaganomics, the flow of cash will bottleneck in consumers wallets, banks, and debt relief, before finally reaching any discretionary outlays,

See for yourself what Reaganomics has wrought:

Weak Consumer Spending: The Canary In The Bear Market Coal Mine

Will Weak Consumer Spending Deflate Stock Markets?

When will the consumer spending surge finally happen?

Gap is closing 175 stores and firing a bunch of people

Sears Extends Losses as Sales Declines Accelerate

Kmart's sales have fallen off a gigantic cliff

Canada’s factory sales drop four times more than expected

Hyundai, Kia cut output in South Korea after sales decline

Existing-Home Sales Decline 3.3% in April

Audi China car sales drop for first time in over two years in May

McDonald's Sees Global May Sales Decline, One Region Shines

Arrium flags asset sales, declining earnings

Single-family home sales down in May
1st dip for metro Toledo since 2014

Tata Motors Hits 52-Week Low as JLR May Sales Decline

J. Crew to lay off 10% of headquarters after horrific sales decline

Kors Shares Plunge 19% On Weak Outlook And Same-Store Sales Decline

First time in 20 Years, Indian mobile phone sales drop

Jaguar Land Rover Profit Falls Most in Two Years on China

Staples reports 39% decline in profit as sales dip

Ford F-150 Sales Tank in May

PC sales in Middle East, Africa region dropped 9.6%

U.S. Industrial Production Falls on Weak Demand, Strong Dollar--Update

Factories Meet New Hurdle in U.S. Consumer Spending Slowdown

At this point I just gave up and posted the Google Search links.

---- Google Search Link: "consumer spending weak"

---- Google Search Link: "sales decline"

---- Google Search Link: "stores closing"

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