The pilot of our great metaphorical economic airplane has just been on the PA system — again — to assure us that everything is going great. But it’s getting harder and harder to believe him. He says we’re making a slow and careful ascent to cruising altitude but it’s been hours since takeoff and we’re only 50 feet above ground. Is that normal? Should there be flames erupting from all the engines? With the turbulence, and the violent maneuvers to fly around tall buildings, concentrating on watching the movie and eating our peanuts is almost impossible. And we just heard the captain mutter, unaware that his mic was on, “What the hell does this button do?”
The state of the industrial economy, 2017.
It’s an engine that runs on spending by consumers, and can soar only when it figures out how to sell more crap to more people every quarter. It used to be easy. Lately — for several years, actually — the whole edifice has rested heavily on the relative well-being of two industries: the restaurant industry and the automobile industry. Now both are flashing red lights and sounding klaxon alarms in the cockpit.
A thriving restaurant industry (much of it fast-food places) is not only comforting to the Overseers (see, consumers have plenty of pocket money, they’re obviously lying about not being able to afford their medications) but the mainstay of the low, low unemployment rate we enjoy as long as we don’t count the unemployables. (You know who was right about that, over and over? Donald Trump, that’s who. During the campaign, not any more.)
But the formerly reliable bastion of prosperity is sputtering. For 11 of the last 12 months, total restaurant sales in the US have declined, even more steeply in February and March. It’s the worst tailspin for the industry since 2009-10 (when Obama was president — wouldn’t you know it.) The industry is responding to this trend by laying off people and raising prices. The Masters of the Restaurant Universe are confident that offering slower service at higher prices will turn things around any minute now.
Over in the automobile sector, things are similarly rosy-looking and under control. Lenders are out swarming hospices in search of people with a pulse who will accept 20-year, zero-interest, no-down-payment, cash-back car loans, which are then bundled as blue chip securities and sold to desperate pension fund managers who are weeks away from insolvency. Inexplicably, problems have arisen. Defaults are sky high, lenders have run out of subprime prospects (they’re going for sub-sub-prime now), inventories of both new and used cars are swelling up like a Kardashian’s rear end. Nothing like this has ever happened before.
Overall, retail sales are down for the second month in a row. This is largely, but not entirely, because of the slump in auto sales; retail stores and shopping malls are closing all over the country at unprecedented rates. WalMart is laying off people, Sears and KMart do not expect to survive the year. Last month, we were told to rejoice, because February retail sales were up. This month’s report had a footnote saying that last month’s numbers have been revised, and sales were actually down. Isn’t it interesting how they do that?
Back in the cockpit, the captain is happily surveying the flashing red lights and shutting off the klaxon alarms and coming back on the intercom to tell us that actually, 50 feet is a perfect cruising altitude, and is the new normal, along with the sputtering of the flaming engines. Nothing can go wrong, he says, because he is the greatest pilot in the history of the world.