Economy in Slow-Motion Financial Crisis
Democrats have been taking victory laps the past few weeks, telling everyone how President Barack Obama saved the U.S. economy. Meanwhile, ordinary Americans are reeling from the slow-motion financial crisis sparked by the president’s bad economic decisions.
That list unfortunately got a bit longer this week, as major retailer Sports Authority kicked off a massive liquidation sale.
The company filed for Chapter 11 bankruptcy in March, but there was some hope it could restructure in time to survive. Unfortunately, the company wasn’t able to pull off a turnaround. (Source: “Sports Authority is kicking off a massive clearance sale at all its stores before shutting them down—here are the details,” Business Insider, May 25, 2016.)
Customers will have to take comfort in Sports Authority’s going-out-of-business sale. They’ll be able to buy everything in the 460 stores; shoes, clothing, athletic gear, and even the furniture will be up for grabs. The company is unloading anything that isn’t bolted down.
Retail analysts have been spinning plenty of excuses to explain away this fiasco. First, they said people aren’t shopping because it’s too cold. Now, they’re saying it’s because it’s too warm. All of this is just a way to rationalize the fact that consumers don’t have the means to shop because they don’t have the income.
That’s exactly what we’re seeing in the financial crisis-type results from retailers like Macy’s, Inc., Dillard’s, Inc., and Nordstrom, Inc. When you lose your full-time job and begin working part-time, you have to cut back on all of the extras. People don’t need new clothes—you can get by without buying apparel.
In April, Aeropostale Inc announced it is shutting down its 800 outlets. After three years in a row of losses, the teen-clothing retailer announced it is “preparing to reorganize under a Chapter 11 bankruptcy.” The news followed only weeks after rivals American Apparel Inc and Quiksilver, Inc. shuttered their operations. (Source: “Aeropostale Said to Prepare Bankruptcy Filing as Soon as This Month,” Bloomberg, April 21, 2016.)
The Obama administration thinks the financial crisis ended in 2008. However, judging from the bankruptcy of Sports Authority and the disappointing results from retailers across the country, there hasn’t been any real recovery for the U.S. economy.