Extended Expansion, Stalled Suburbs & Return Of Retail?


The current US economic recovery becomes the longest in US history at over 10 years, surpassing the previous record expansion of exactly 10 years and that ended in 3/01. Economist Elliot Eisenberg, PhD. predicts this recovery will last at least another nine months. The thing that is most likely to end it earlier is a trade war that simultaneously hits equities, business investment and consumer spending.


Since the end of WWII, there have been eleven economic recoveries. While this one is now the longest, real GDP is just slightly more than 20% higher than its pre-recession peak. Measured this way, the current recovery ranks fifth, having recently surpassed the 73-month 2001-2007 recovery, despite being 66% longer. The biggest recovery was the 106-month 1961-1969 recovery, when GDP growth rose slightly more than 50%; economically magnificent!


From 2000-2007, American and Canadian debt-to-disposable-income ratios rose in tandem from 100% to 140%. They have since diverged. The US rate has steadily declined to 103%, while in Canada it’s 175%, one of the highest ratios anywhere! Canadians now spend a record 14.9% of disposable income on debt service, here it’s just 9.9%. Devoting so much income to debt service will drag down consumer spending and constrain the central bank.


Historically, new housing led to more local shopping, and thus higher local sales tax revenues. But due to online shopping, that relationship has been attenuated. Moreover, there is now heightened demand for downtown office space rather than suburban office parks. Thus, new homes don’t generate as much new commercial property tax revenue as in the past. Collectively, these trends reduce the economic appeal of entry-level housing for suburban counties.


Despite department and clothing stores losing jobs (81,400 over the past year, down to 2.44 million), mall vacancy rates have steadied at 9.3% after rising for two straight years. And, the vacancy rate at strip malls fell to 10.1% in 19Q2 from 10.2% in 19Q1, the first quarterly decline since 16Q1. The combination of retail adaptation, mall repurposing, demolition, and limited new mall building, is starting to turn the tide.


Based on data through 2018, India, in 2014, had the largest number of registered voters for a national democratic election with 834,101,479. The US is a distant second with 214,109,367 registered voters in 2016. Indonesia is not far behind with 193,944,150, then comes Brazil with 147,306,275. Russia (which votes despite barely being a democracy) follows with 109,008,428. Pakistan is 6th with 105,955,409 and then Bangladesh at 104,190,480.

Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.

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