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Hebert Research Newsletter
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Welcome to the August 2011 Hebert Research
Newsletter!
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Research Briefs and Trends
Unemployment Not Shared Evenly
The official unemployment rate of 9.2% is serious, but for major
segments of the job market it is far worse. For
young men between 16 and 19 the unemployment
rate has increased from 19% in 2007 to 27%
currently. For women in the same age group the
unemployment rate is currently 22%. African
Americans' rate of unemployment is 15% and it is
three times the rate of whites and Asians which
are at around 5%. Education is a key variable,
with those who hold less than high school
degrees lacking employment at nearly three times
the rate of those with college degrees. And
finally, the average length of unemployment is
six months for 43% of the currently unemployed
people.
First of all, the high unemployment rate is
solvable, especially if economic policies
address areas of the statistical unemployment
distributions which are really affected. Low
skill labor positions have for far too long been
transferred to other nations. The demand for
lumber is a case in point. Instead of finished
lumber being processed in local mills, whole
logs are exported and shipped directly to China,
where they are processed, and resold. These are
jobs that offer livable wage employment for
young people. Increasing the level of education
and workforce training, without unnecessarily
increasing the cost, prepares the younger and
ethnic populations to compete for domestic
employment. The solution to chronic unemployment
is in the numbers - but willingness to look for
these solutions is absent.
US Mall Vacancies Are Increasing
In 2001, the US malls vacancy rate was only 7.0%. At that time the
vacancy rate for strip-mall centers was 5.6%.
This year the vacancy rates have increased to
11.0% and 8.9% respectively. The announcement of
Borders Books going out of business on July 21,
2011 reflects more to come. All of the economic
indicators for retail facilities, including the
9.2% unemployment rate, and 58.5 consumer
confidence index, continue to worsen.
There are
two more fundamental reasons for these negative
changes. Retail malls and other centers were
being built at a faster rate than the market
demand indicated. Secondly, retail demand has
been shifting to online retail and retail
concepts like the Microsoft and Apple Retail
Store, which produce more than three times the
sales per square foot than large department
store anchor merchants.
An important law in
economics is that retail does not create sales -
it only trades it to other merchants and venues
that are more closely aligned with the consumer
needs and wants. In the long term, retail can
only grow as a whole with increases in younger
populations, rising personal income, and
additional credit. None of these indicators are
reflecting new growth trends.
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Sincerely,
Jim Hebert
President
Hebert Research, Inc.
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