The downsizing of the U.S. consumer
I just came across a cool graphic that supports the statement that I made earlier today that The United States has too many stores.
From 1980 through 2008 consumer spending rose from 63% to 71% of U.S. GDP. In order to spend more, U.S. consumers were saving less. The savings rate in the U.S. actually went negative during 2005 and it stayed at an unsustainably low level until the current recession scared people back to their senses.
As of Q1 2009, the savings rate in the U.S. had risen to 4.4% and it is continuing to rise. It is difficult to say exactly what level it will stop at, but many believe that it will increase to as much as 9% over the next several years. That may sound like a lot to some people, but in comparison to the rest of the world, it's nothing. Back in 2005 when our savings rate went negative, Europeans were saving 20% on average, Japanese were saving 25%, and some estimate that China had a national savings rate of almost 50%!
I realize that the sectors that have been beaten down the most are usually the ones where the biggest gains are made, but I personally cannot justify diving into retail knowing what I do about the headwinds that the sector faces.