Saturday, April 7, 2012

Kunstler Triumphant?

The larger underlying reality is that the United States as an entire, integral organism, has got to contract, downscale, and reorganize. The mandates of energy resource reality demand it. We can't maintain our way of life at its current scale and we have to severely rearrange and rebuild the infrastructure of it if we expect to continue being civilized. We have to get the hell out of suburbia, shrink our hypertrophic metroplexes, re-activate our small towns and small cities, reorganize the way we grow our food, phase out the big box retail (and phase in the rehabilitated Main Streets), start making some of our own household goods, and hook up the far-flung reaches of this continental nation with a public transit system probably in the form of railroads. By the way, there are plenty of "jobs" in this process, only not the kind of work we've been used to... sitting in cubicles or assigning tanning booths.
- James Howard Kunstler, "Swingtime", January 25, 2010

I've written before about where I think Kunstler gets it wrong. But a lot of what he talks about is being confirmed by the latest news:

Census Data Offers Look at Effects of Recession (New York Times):
The Census Bureau offered the first detailed picture of population shift in the United States since the end of the recession, releasing data that showed that population growth in outer suburbs — the fastest growing areas in the last decade — all but ground to a halt in 2010 and 2011, as the painful effects of the housing crisis lingered.

The country’s outer suburbs, often referred to as the exurbs by demographers, were at the forefront of the country’s population growth for most of the last decade. New houses mushroomed in those areas as young families bought homes on credit that was easy to get, following the tradition of moving to the suburbs to begin adult lives.

But when the housing market collapsed, growth in those areas slowed drastically. The economic recovery has not revived population growth in those areas and, according to an analysis by William Frey, a demographer at the Brookings Institution, has only served to flatten it further. Population in the country’s outer suburbs grew at just 0.4 percent in the year ended last July, down from 1 percent in the previous year and a peak in 2006 of more than 2 percent.

“The exurbs were the cutting edge of growth in the United States in the boom period,” Mr. Frey said. “That growth has really come to a standstill, and is maybe being given up for dead at this point.”
The Era of Big Box Retail Dominance Is Coming to an End (Bloomberg):
When Best Buy Co. (BBY) said yesterday it was closing 50 big stores and opening 100 smaller ones, the world’s largest electronics retailer was adjusting to reality: The era of big-box retail dominance is coming to an end.

After 50 years of putting mom and pops out of business, big-box retail is having a mid-life crisis. A slow economy has hurt same-store sales, narrowing margins at big stores. Meanwhile, consumers, armed with price-comparison technology, are visiting more stores seeking deals or exclusive merchandise rather than making one-stop, fill-the-cart excursions.

“We’re undergoing a seismic shift,” said Natalie Berg, an analyst with Planet Retail in London. “People are still cutting back. People are buying more products online so there is a real case for downsizing stores.”

Since the recession, big-box retailers have struggled. Until its third fiscal quarter last year, Wal-Mart had posted eight consecutive quarters of declining sales at stores open more than 12 months. Best Buy posted five straight quarters of profit decline before reporting a $2.6 billion loss on March 29, while analysts forecast declining same-store sales and profit for Target this year.

Big-box retail was born in 1962. That’s the year that Wal- Mart, K-Mart and Target all opened their first large discount stores. As they grew, the new big boxes began offering broad selection and low prices to a growing population of suburbanites who had left the cities in their new cars, searching for their piece of the American Dream.

Big boxes boomed in the go-go 1990s. Fueled by an inflated stock market and loose credit, Americans expanded farther into the suburbs and filled their new homes with appliances and consumer goods, said John Lupo, a retired Wal-Mart executive who now sits on the board of AB Electrolux. The housing boom propelled the big-box retailers into the new millennium. Then came the crash and consumers pulled back.
Young People Are Driving Significantly Less (FireDogLake):
The trend away from driving has been led by young people. From 2001 and 2009, the average annual number of vehicle-miles traveled by young people (16 to 34-year-olds) decreased from 10,300 miles to 7,900 miles per capita – a drop of 23 percent. The trend away from steady growth in driving is likely to be long-lasting – even once the economy recovers. Young people are driving less for a host of reasons – higher gas prices, new licensing laws, improvements in technology that support alternative transportation, and changes in Generation Y’s values and preferences – all factors that are likely to have an impact for years to come.

The recession has played a role in reducing the miles driven in America, especially by young people. People who are unemployed or underemployed have difficulty affording cars, commute to work less frequently if at all, and have less disposable income to spend on traveling for vacation and other entertainment. The trend toward reduced driving, however, has occurred even among young people who are employed and/or are doing well financially.
In U.S. Manufacturing Revival, Small Businesses Could Play Crucial Role (HuffPo)
Faribault, Minn., is a long way from Silicon Valley, and Faribault Woolen Mill Company may be a far cry from the typical startup. But when cousins Chuck and Paul Mooty first toured the vacant 147-year-old mill in July 2011, they knew the dilapidated building with a flooded basement and outdated equipment was the kind of business that could spark a manufacturing revival -- even a revolution.

"What we had here was a great Americana brand -- the oldest manufacturing entity in the state of Minnesota," Chuck Mooty said. "We had a very short window of time to take something and brush it off. We could have thought of all the reasons not to do it, but we took a leap of faith. We just had the feeling that someone had to step up and bring this thing back."

Chuck and Paul Mooty aren't the only ones giving manufacturing another shot. When President Barack Obama, in his State of the Union address, touted "an economy built on American manufacturing" and acknowledged the "huge opportunity at this moment to bring manufacturing back," manufacturing went from boring to buzzword overnight.
America's Growing Urban Footprint (Atlantic Cities):
Not only are more Americans living in urban areas, but those urban areas are getting bigger.

According to new figures from the U.S. Census Bureau, more than 80 percent of the U.S. population lives in urban areas – areas that range wildly in population and density, as we recently reported. And with this latest count of urban dwellers, the Census Bureau has also released revised measurements of just how big the country's urban areas are geographically. With the rise in urban population, there has also been a rise in the sheer size of many cities and urban areas.

"The suburbs are just growing outward," says Kevin Hawley, a geographer at the Census Bureau. "That seems to be the case in most of the larger areas."

These growing urban areas aren't just cities extending their borders, according to Hawley, but rather clusters of urban development on the fringes of cities that are growing towards each other. As two areas spread out and get closer together, the space in between "gets sort of swallowed as growth between the two areas happens," Hawley says.

And though Atlanta is somewhat of an outlier in terms of its huge expansion, many other cities saw large increases in their urban areas. There were 29 that saw increases of 100 square miles or more. And 76 saw increases of 50 square miles or more.

So rather than people moving back to cities, cities are expanding. I still see this as a good trend. People living closer to urban areas, even if they are in suburbs, is still good for urban areas. These places tend to be a bit more dense and walkable than the extreme exurbs. And public transportation lines can be extended to serve them. We'll see the corner strip malls have a few less Tuesday Mornings and Relax The Backs, and more food stores, aquaponics, and bike shops. And we can potentially deploy Galina Tahchieva's Urban Sprawl Repair Kit.

Unfortunately, it looks like the rail comeback may have to wait awhile: High-speed rail plan is a risk California can't afford (Lodi News-Sentinel)

And see: Some Dreary Forecasts From Recovery Skeptics (NYTimes):
The bears point to weakness underlying current numbers. Disposable personal income, a measure of how much money Americans have left over once they have paid their taxes, has barely been increasing of late, raising questions about how much spending the debt-soaked American consumer can contribute to the recovery. The shock of growth at the end of 2011, which gave a shot in the arm to economic confidence this spring, came mostly from wholesalers restocking their inventories as well.

“Final sales are barely growing,” Professor Roubini said. “So I don’t see a sustainable recovery coming from that.”

On top of that, the bears note that some trends could be making the job gains and economic growth of the last few months seem more robust than they really are. One factor is the warm winter, which might have pulled forward economic activity from the spring. In a research note entitled “Sticking With Sluggish,” the relatively pessimistic analysts at Goldman Sachs argued that the “exceptionally mild” winter stole commerce and hiring from March and April.

Moreover, the surge of hiring in the winter, which was unexplained by growth in economic output, could have been from employers who had laid off too many workers during the recession and were swinging the other way by adding too many workers, meaning hiring might slow down again.

Those trends were perhaps borne out in the lower-than-expected jobs number released on Friday, which showed that private employers added 121,000 workers in March, just 2,420 jobs per state and about half the amount added in the previous three months.

Then, there are the headwinds coming from Europe, where debt yields are rising yet again for countries including Spain. The economy is cooling in China, now a major United States export market. Worse, gas prices have continued to track upward over increased demand from emerging economies as well as from concerns about a confrontation with Iran as the White House and the European Union prepare to apply strict new sanctions.

It all adds up to a bleak picture, at least in the bears’ minority opinion.

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