Are brick-and-mortar stores in peril?
While overall accelerated technology, and specifically robotics, have sped up their evolution in the past two decades, the most dramatic economic impact has hit America’s consumer sector, which currently comprises 68% of America’s $18 trillion GDP.
This vast retail sector, where tens of thousands of shopping centers comprise the center of much of these consumer goods providers, has become increasingly vulnerable to the mid-1990s appearance of Amazon, the incredible purveyor of goods to tens of millions of America’s vast shopping community.
Utilizing drones and other advanced methods of direct shipment to America’s near-330-million-strong population, this continually fast-growing entity is primarily spread throughout a vast geographic area which, over the years, had depended on shopping centers for retail goods availability. This is especially so in the wide open spaces west of the Mississippi River, which has few big cities and suburbs.
To fill this ever-increasing void, Jeff Bezos and his breakthrough Amazon Corp. have begun to make massive inroads into quick fulfillment of consumer needs previously provided by such mail-order giants as Sears Roebuck, Montgomery Ward, J.C. Penny and more that have recently lost market position, revenue and profit.
But even more vulnerable are the tens of thousands of shopping centers that have become the haven of availability to the demanding customers in America’s vast rural areas and countless small towns that had sprung up everywhere, as well as in the larger city suburbs.
Amazon, this 20-year-old master consumer distributor, has introduced the most feasible deliveries of everything from women’s clothing to books and more on an overnight basis, in most cases.
But while it has played havoc with the existence of the nation’s shopping center community, at large, it has overtaken the big city department stores like New York’s Macy’s, as its lightning-fast availability makes an ever-increasing number of products available to consumers everywhere.
This has resulted in one of the fastest-growing independently held corporations whose stock issue had reached $1,000 per share in late May. A $5,000 investment in 1997 would exceed $1 million today, if held over the past 20 years.
The spread of Amazon stores themselves has grown, which indicates that this fabulous ultra-modern creation is looking to become bigger and broader in conquering America’s vast consumer market, a goal that seems to have no bounds.
Has a disproportionate consumer sector depressed the U.S. economy?
When noting the lengthy standing of the U.S. consumer sector, at close to 70% of the nation’s gross domestic product (GDP) of goods and services over the last two decades, it should have called attention to the disparate nature of the current U.S. economy.
When America’s fast-growing economy in the latter stages of the 20th century indicated a consumer sector in the 40% range, this was considered a reasonable segment that was even then the world’s largest. But American GDP of $18-plus trillion, although impressive in its total, is far too heavily based on consumption. This is due in part to the past few administrations being primarily sensitive to providing the American consumer with the cheapest prices the world had to offer.
What is now well known is that America’s largest corporations and conglomerates have focused on the world’s production that is either under their financial control or available to them at cost prices, allowing for a substantial profit margin. This makes sense for such big business enterprises, since their stock market value is primarily predicated on their earnings.
The disparity of misspending by the federal government on the U.S. Environmental Protection Agency, Frank-Dodd regulations, and experimental renewables, while Congress had voted close to $1 trillion to lift the U.S. economy out of the Great Recession’s doldrums, set the pattern of misspent expenditures for the next eight years.
It was also done at the expense of avoiding the nation’s badly-needed “infrastructure updating” and the closing up of American factories, that couldn’t meet foreign competition. This also resulted in nearly $2 trillion generated by American companies in foreign countries, allowing this to add to the U.S. debt, which has now climbed to nearly $20 trillion.
Although America’s advanced technology, unlimited national resources, and a residual manufacturing base continue to be reasonably productive, the $10 trillion debt generated by the Obama Administration is only a forerunner of the eventual downturn that a lack of directional change could impose on the nation’s future economy. At this time, no plans are afoot to keep this awesome debt from getting worse, and at higher future interest rates.
Will a $20 trillion treasury debt hobble Trump’s ambitions?
While President Trump’s shopping list of economic initiatives will attempt to undo the U.S. economic downward dirge of the past eight years, the onerous weight of a $20 trillion Treasury debt could scuttle the positive initiatives now afoot.
Ironically, the Obama $10 trillion of debt that doubled the rest of all previous 43 Presidents’ accumulated Treasury debt, was prevented from ruining the U.S. economy since it was coincident with the span of the lowest interest rates the nation has ever faced in modern times.
Unfortunately, the Obama presidency engendered an unparalleled reduction of manufacturing jobs, closing of factories, and the indefinite postponement of an overdue national infrastructure. Therefore, much of the trillions available to the Obama Administration was utilized for Medicaid and various unemployment programs. These prevented a major employment deflation from becoming an undue economic weight on America’s near-330 million population. In fact, the resultant lower prices were appreciated by much of the nation’s all-time-high consumer sector.
While Trump is attempting to “right” the listing ship of state through a combination of executive orders, deregulation, more equitable trade deals and an up-to-date tax structure, this will be faced with increasing interest rates that will likely double if Trump is reelected for another four years in 2020.
The heavy “shopping list” that the Trump Administration is attempting will likely face the headwinds of strong interest rate increases. These are making the Trump years much more expensive for the American public. This factor is just the opposite of the post-Jimmy Carter years of Ronald Reagan, which faced many of the headwinds that President Trump is attempting to soften.
But where President Reagan’s post-Carter years featured a dramatic decline from all-time high inflation, Trump’s burden will largely be compounded by the previously mentioned re-inflation. This is surely waiting in the wings.
While predecessor Obama’s oppressive added regulations and indiscriminate climatological and production-reducing inhibitions have kept new economic recession at bay, President Trump will have to reset his most optimistic objectives as both domestic and foreign policy problems pile upon him.
This reverse from the “rags to riches” of the Reagan years, and the $10 trillion bequest to keep unemployment disaster from sinking the concurrent eight-year ship of state during the Obama Administration, will make the Trump leadership the most difficult task ever attempted.
Why must the U.S. retail sector shrink dramatically?
When examining the trend of America’s world-leading retail sector, from both total revenue generated as well as the percentage of the nation’s globally dominant GDP, it’s becoming readily apparent that the 68% total of GDP’s $18-plus trillion was way out of line in comparison with America’s long-term economic history.
Although the 330 million strong American public is rightfully celebrated as the world’s most prosperous, among major nations, one-third of the GDP total would seem adequate in a balanced equation of the world’s most productive national entity.
While researching the reasons behind such outlandish retail volumes and GDP percentages, it becomes apparent that such disparity accelerated a major disinflation since the turn of the current millennium. But it had its most dramatic rise in the last eight years during the reign of the two-term Obama Administration.
The reasons behind this amazing dominance of low-cost retail activity came largely because of unprecedented imports, providing low-cost consumer goods at the expense of domestic production of all types of consumer goods.
A further breakdown of industrial GDP percentages and consequent revenues indicated major shutdowns of factories, employment, and independent small businesses. These were apparently abetted by such business back-breaking regulations as those issued by the EPA and the Frank-Dodd initiatives that stifled such effective functions of tens of thousands of small businesses; these were added to by the excessive cost of non-productive paperwork, etc. involved.
Whether this denuding of America’s dominance as a leading power of manufacturing, mining and commodity excavation was deliberate or accidental is in question at this stage of the debate created by the Trump Administration.
What is reality is the cost advantages provided to conglomerates and some of the largest corporations through transferring their facilities abroad with impunity, which gave them the advantage of increased investor attraction.
This analysis has been confirmed by the Trump Administration’s analysts, whose associates and executive direction are now responsible for bringing the U.S. back into balance. This particularly includes bringing America’s military balance of power back into its former status of restraining the surge of nihilism spreading throughout the world, a responsibility that this nation assumed during and after World War II. This has provided benefits to the world as a whole, in addition to the U.S. as an uncontested world leader.
Such future major changes, including foreign policy approaches, border control, overstaffed agency shrinking and blindly pouring billions into a United Nations not friendly to America’s objectives, will have to be confronted within the first half of the Trump Administration’s four-year certification.
Are executive orders a path to dictatorship?
While the harsh term “dictatorship” conjures up the maniacal images of World War II’s Hitler, Mussolini and Stalin, the power of the first two was the result of the German and Italian Parliaments’ collapsing through endless infighting.
Although the U.S. has been spared a breakdown of the founding fathers’ governmental balance — Executive (President), Legislative (Congress) and Judicial (Supreme Court) — the surge of critical decisions since the turn of the century has resulted in the increasingly indiscriminate use of presidential executive orders to govern the U.S.
Based on their numerical usage, such executive orders took a major step forward during the two-term Obama Administration. These became especially intense during Barack Obama’s second term, when he was faced with Republican majorities that were becoming increasingly antagonistic toward the president’s domestic economic and foreign policy approaches.
Like the doubling of the U.S. Treasury debt, accumulated by the totality of his forerunners (from $10 to $20 trillion), such an increase in executive orders by President Obama reached almost a similar level proportionately, as President Trump has taken up where President Obama left off.
Most of the current president’s executive orders have attempted to reverse policies (EPA, Obamacare, climatological regulations, states’ rights override, etc.) implemented by the previous White House.
Unfortunately, the incomparable animosity between America’s two major political parties are making unified governance practically impossible on both domestic and international issues. Therefore, the current administration has taken upon itself to use the option of executive orders over the opposite choice of inaction. It depends on one’s political outlook to determine which is the lesser of the two “evils.”
Since the current political divisiveness is displaying an increasing schism between the GOP and the Democrats in the House and Senate, it is likely that President Trump will choose executive orders to pursue America’s foreign and domestic interests.
When considering the growing backlog of unfinished business complicated by new problems piling on, the current action-minded president will almost surely choose the executive-order option. This intensification will likely become the battle cry of the opposition Democrats as the 2018 mid-term Congressional elections come closer.
Will Mexico become the ‘New China’ trade partner?
With the rejection of the Trans-Pacific Partnership because of its one-sided aspect, according to President Trump, the Mexican economic minister’s suggestion of Mexico as a rational comprehensive replacement, seems to make sense.
Although America’s opinion shapers have concentrated on America’s southern neighbor’s negatives, such as illegal immigration, rampant drug cartels and the impact of corruption on PEMEX, Mexico’s gigantic oil industry (now reopening to foreign investment), little has been communicated regarding Mexico’s overall industrial advancement.
With a doubling population reaching 130 million in the past 50 years and a GDP surpassing $1 trillion, Mexico’s productive capacity has been overshadowed by a vicious drug cartel exporting much of its wares over the Mexican/American border.
What has been sadly overlooked has been Mexico’s indigenous and growing production complexity and the acceptable quality levels it represents. In fact, Mexico has also become the instigator of Maquiladoras, a group of near-border production sectors not subject to any tariffs that welcome the employment of Americans as tax-free supplemental employees to the Mexican base.
While considered quality equal or superior to their Asiatic equivalent, these maquiladoras and their Mexican production service centers provide U.S. customers, distributors and their affiliates with timely deliveries and smaller order necessity due to their proximity.
With Mexican industrial capacity expanding under President Enrique Peña Nieto and his considerable governmental support, this opportunity has been drowned out by the negative publicity of unwelcome emigration to the U.S. Unfortunately, the current reduction of illegal border crossings has not been given much consideration.
Due to the influence of American media, in addition to the Trump emphasis of all possible imports returning to the U.S., the highly positive significance of a major export/import U.S./Mexican breakthrough has not made headlines. If Mexico’s leadership would put greater emphasis of such major economic breakthroughs encouraged by the two NAFTA neighbors, it could help solve the major problem that exist between the U.S. and Mexico, thereby improving relations, increasing goodwill and mutually improving both nations economies.