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The U.S. economy was supposed to be turning a corner by now, but instead it looks like we are headed for an exceedingly painful winter. All over the country, big companies are laying off thousands of workers, and in some cases the numbers are even larger than that.
Even before the viral outbreak had started, businesses were filing for bankruptcy, but the unemployment rates that resulted from the present collapse were unexpectedly high, especially after witnessing the historic low in February. The first spike was shocking, with over 1 million jobless claims registered in a week, and although the numbers haven’t peaked that high in recent days, last week, another 800,000 claims were filed, and forecasts for the winter indicate that tens of thousands of workers will be permanently laid off by the end of the year.
According to a recent piece published by the WST, we are on a path to set new records for retail store closings, retail bankruptcies, and retail liquidations this year. The publishing states that “retail store closings in the U.S. reached a record in the first half of 2020 and the year is on pace for record bankruptcies and liquidations as the sanitary crisis accelerates industry changes, particularly the shift to online shopping, according to a report on the downturn’s severity.
If the current trends continue, the 2020 retail bankruptcies will exceed the ones that happened in 2010, when 48 retailers went bankrupt during the Great Recession of 2007-2009. This tendency has been going on for a while now. In 2019, 22 retailers filed for bankruptcy, summing to a total of 5,998 store closures up until this point. And every week more and more companies announce they will be shutting their doors for good. Last week, coffee giant Starbucks disclosed that 400 of its restaurants would close, while Telecom behemoth AT&T will have 250 of its locations shut down. Bed Bath & Beyond will downsize 200 of its outlets and Macy’s will be closing 125 of its stores. In any case, the retail sector isn’t the only one that has been absolutely hammered in face of this unprecedented economic collapse. – the broader commercial real estate market, by contrast, continues to implode at the epicenter of New York City, “where nearly 6,000 business closures, has resulted in a 40% eruption in bankruptcy filings across business districts of all five boroughs this year,” reported Bloomberg. Moreover, the Partnership for New York City, a nonprofit membership organization of NYC’s top businesses, alerted that the effects of the health-crisis-related restrictions could potentially close a third of the 230,000 businesses across all five boroughs for good. The Bloomberg report also described that bankruptcy filings in the region have soared since mid-March, which was when the state of New York reported its first casualty from the viral outbreak, leading Governor Andrew Cuomo to close all nonessential businesses.
Court records show that there were 610 filings in the Southern and Eastern Districts of New York from March 16 to September 27, marking a 40 percent surge from the same period in 2019 and the highest by far for any year since the financial crisis.
And, on top of all this overwhelming announcements, here comes even more concerning news: the airline industry is on the brink of a historical fall-out if the federal government doesn’t proceed to enact a massive bailout. According to Wolf Richter on his daily Wolf Street economic examination, “October 1 is the day US airlines that accepted their portion of the $25-billion bailout under the CARES Act can start involuntary layoffs of their employees. They’ve been shedding large numbers of employees since March but through voluntary buyouts, early retirements, and other programs that induced employees to temporarily or permanently leave. Now the airlines are engaged in a desperate lobbying effort to get legislation signed into law that would provide the next $25-billion bailout package. Threats have been flying, so to speak, to motivate Congress to get this done. American Airlines CEO Doug Parker told CBS News on Sunday that if there isn’t a new bailout program, “there are going to be 100,000 aviation professionals who are out of work, who wouldn’t be otherwise.” This would include the 18,000 employees American Airlines has threatened to lay off.” All these crushing events are going to resonate on winter’s unfoldings, and soon we will unfortunately see more people in financial distress and more businesses disintegrating. From where we stand, the economic future doesn’t look any more promising. The dominoes are falling and our society is crumbling. We do hope America still has the resilience to deal with everything that is coming for us.
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