As expected, holiday retail sales were abysmal, and now many retailers will go out of business. The new bankruptcy law that Republicans pushed through in 2005 severely limits the time a company can spend reorganizing, so it is likely that most retailers who go bankrupt will liquidate rather than reorganize. This will push unemployment higher and increase financial pressure on states as they provide unemployment insurance to ever-increasing numbers.
The empty stores will impact shopping center/mall owners and management companies. Vacant anchor stores will cause malls to lose customers, thereby negatively impacting the remaining stores. Big box retailers will be replaced by stores selling liquidator goods from the out of business retailers, putting downward pressure on mainstream department stores.
There will be virtually no demand for new shopping centers, and there will be pressure for shopping center owners to lower rents. Losses incurred by shopping center developers and managers will lower the value of Real Estate Investment Trusts, which will hit retirement plans hard.
This is what we have to look forward to in 2009, and it is only a cursory look at the retail sector.
Where is the bottom of this recession? How long before we reach the bottom and start to see some light. Anybody have any clues?