...Howard Davidowitz, a longtime retail analyst and chairman of Davidowitz & Associates, a consulting and banking firm, [says] the retail sector looks bleak.
"This economy is in trouble," he says in an interview with The Daily Ticker. "The middle class is crushed. The only growth area in this economy is poverty."
Davidowitz argues that the low-wage, part-time jobs that have been created in the U.S. over the past few years have done little to boost economic growth and individuals' personal welfare. Even the stores that cater to the middle- and lower-income classes - such as Walmart - are trimming profit forecasts because of a "challenging" retail environment.
Not all consumers are struggling - Davidowitz says Americans in the top 10% income bracket will be busy spending their money next month. Luxury retailers such as Tiffany (TIF) and Michael Kors (KORS) will be two of the big winners this holiday season.
"If I'm upscale, I'm a happy camper," says Davidowitz. "The top end will do great."
Remember, money is worthless in itself. After the bare minimum you need to keep yourself alive, the rest is 'positional.' It just tells you how you rank...that is, where you stand compared to other people. More money means you can get more stuff.
"And you can get more expensive stuff," Elizabeth adds. "They are now selling sweaters for $2,000. And women's handbags sell for as much as $10,000."
"Positional goods," economists call them. Like a Rolex or a Patek Philippe watch, they are like officers' insignia in the consumer army. The $2,000 sweater doesn't keep you any warmer but it puts you among the generals rather than with the privates.
"I live in Aspen, CO," a psychologist friend explains. "Nothing but rich people there. But guess what? They're miserable. The women all have the same strange look - like some kind of robotic females - because they all have the same plastic surgeon. The men are all so busy with their careers - earning money -- that we only see them on weekends and holidays. They're on their second or third marriages. And the children are a mess.
"These people have everything you could want. Palatial homes. Their own private jets. The latest gadgets. The latest fashions. But all that stuff just seems to get in the way.
"One kid I know only saw his mother only after he got home from school. The parents had an au pair get him ready in the morning and take him from school. Then, someone would pick him up from school and he would see his mother, but just for a few minutes, because she's a busy executive too. And then they call me in because the kid is having trouble ...
"I just say, 'well, duh!'
"The suicide rate in Aspen is 4 times the national average. Figure that out. Everyone wants to get rich. Then, they move to Aspen and they're so miserable they want to blow their brains out."
Smart money. Dumb money. Rich. Poor. Everyone buys stuff he doesn't need...often with money he doesn't have. And he thinks it will make him happy.
Then, one delusion feeds off another one... The feds see the higher sales numbers...they see the retail clerks bagging packages...and the credit cards sweeping through the automatic tellers...and the automobiles backing up at mall entrances...
'Hey,' they tell us, 'it's a consumer economy. People are consuming. The GDP is growing. That'll make people happy."
Economists act like a person at the Thanksgiving table:
"Go ahead...have another piece of pumpkin pie. You can put away another slice. And put some whipped cream on it."
"Thanks a lot. Just what I needed."
Just because you can doesn't mean you should.
Not that we have anything against consumerism. It is just as good as any other kind of 'ism,' as far as we're concerned. But are people really happier when they spend money? Are they happier when the GDP goes up? Are they happier when they have more stuff?
Answer: not necessarily.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.