Reply #21: Some observations [View All]

[teryang]

This report appears to be relying heavily on the household survey which reflects the so called "self employed."

With low interest rates and increased homeowner equity, the chronically unemployed are borrowing money (against their homes) to set up small retail operations. Many if not most of these operations will not succeed because they are not competitive.

I've noticed in observing the local retail and commercial real estate markets that real estate is way overpriced for the income or revenue level it is capable of sustaining. Many of the smallest businesses have been for sale for months and don't move because they are marginal or losing money. Nevertheless, empty retail spaces that have been vacant for months where previous businesses failed are now filling up again. These ostensibly represent an opportunity for income as start ups. Yet the ongoing businesses in these locations failed just within the last twelve months or so. I have no doubt that this represents "growth" in jobs and "growth" in the economy. These new "businesses" have to buy fixtures and stock. They may even hire some people at low wages.

I recently sat in a new franchise business which probably cost its owner $300,000 or more to start up, not including any overhead or operating costs. I was the only customer until another customer came in to pick up her order. The OWNER argued with this customer for 20 minutes as the customer to tried to use a discount coupon improperly while three employees looked on. (A similar franchise next to a home depot in another busy center, no less, has been for sale (at a loss) for over a year.)

There used to be two food service businesses in this well located and heavily trafficked shopping center. There are now five. I know how one of the original restaurants operates in this center. By ripping off its employees and regularly failing to pay taxes, state and federal. Of course they have no insurance of any kind. They even steal their employees fica witholdings. In a year three out of the five of these businesses will be for sale or gone.

In a year or so, the fifteen or twenty start up businesses that I have observed in my imediate neighborhood in previously vacant real estate will be gone and vacancy rates will be on their way up again.

I could go on on how tight retail business is my area in contrast to the reports of january's booming retail sales but why bother. These are my subjective observations and may not apply to your area, particularly if you live outside Fort Stewart or some other booming area directly involved in government military spending.