At the end of 2009 we heard many commentators celebrate the ending of the recession and the arrival of a new year that would bring lower unemployment and more economic activity. However, the real indicators are pointing to more job losses and the possibility of more personal and business bankruptcy filings in 2010. Numbers for retail sales have come out and they’re indicating that most consumers are clamping down on spending causing many retailers to move closer to Chapter 11 bankruptcy.
Retail sales unexpectedly fell in December, leaving 2009 with the biggest yearly drop on record… The Commerce Department said Thursday that retail sales declined 0.3 percent in December compared with November, much weaker than the 0.5 percent rise that economists had been expecting. Excluding autos, sales dropped by 0.2 percent, also weaker than the 0.3 percent rise analyst had forecast.
For the year, sales fell 6.2 percent, the biggest decline on government records that go back to 1992. The only other year that annual sales fell was in 2008, when they slipped by 0.5 percent.
The 0.3 percent decline in December was the first setback since September, when sales had fallen 2 percent. Sales posted strong gains of 1.2 percent in October and 1.8 percent in November, raising hopes that the consumer is starting to mount a comeback.
But unfortunately, those were false hopes. Some retailers are now considering Chapter 11 bankruptcy even as their cautious consumers face their own financial challenges such as foreclosure and consider using bankruptcy to survive. Many consumers have suffered job losses and have been unable to find new work or work that provides a living wage. And despite their efforts to avoid bankruptcy at “all costs” the reality is that while the number of initial unemployment benefits claims have decreased, the number of Americans using “emergency extensions” of the unemployment system has increased indicating that more Americans are remaining unemployed longer. As the prospect of decent employment diminishes many of those Americans may file bankruptcy.