Howard Davidowitz: 'The Worst Is Yet to Come'

For all those policymakers, "economists," and TV pundits whose thinking has been clouded by the "green shoots" they've been smoking lately, I've got the perfect antidote: Howard Davidowitz.

In fact, if the reality described by this retail industry consultant in the following Yahoo! Finance Tech Ticker column (and accompanying video). "'The Worst Is Yet to Come': If You're Not Petrified, You're Not Paying Attention," doesn't sober these delusiabulls up quickly, I'm afraid nothing will.

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.

"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

Comments

[Fighting Yoda:]

Howard Davidowitz is right the worst is yet to come. And there absolutely are no green shoots anywhere- whatever few are all illusory - created by unprecedented liquidity injection. All these green shoots will quickly turn yellow and die.

- Commercial real estate implosion is round the corner - it will have even bigger catastrophic impact on the banks.
- Consumer savings: US consumer will go from negative savings to 10% (already up to 4% now). This itself will shrink the economy by more than a Trillion.
- Job Losses: These will go way north of 12%
- Housing: 20-30% downside still exits – job losses, excess inventory of homes, lack of credit availability, lack of credit worthy borrowers

The current rally was orchestrated enable banks raise money. Some foolish investors did pony up the money, despite buying stocks at discount are already down.

May 17 03:10 AM

[joe atv buyer:]

We are a headed for a huge fall, of unpresidented scale. Just imagine if we had a major oil shock (terror, hurricane) or disruption to flow right now. 98% of people I work with (health care) are completely clueless and don't even care to hear the issues. It utterly amazes me every day..

The west is facing the biggest event probably ever- and no knows or even cares! Talk about a perverbial frog in a pot of near boiling water!

There is no possible way the USA can hold present course and standard with these debt levels, I am shocked we have lasted this long. Just goes to shows how much control bankers actually have on "the system"

Instead of looking for green shoots, we should all be trying to get rid of the chickens in the garden, green shoots are just beggging to be gobbled up!

May 17 12:03 PM

[henarl:]

I think those green shoots will turn out to be mostly weeds!

May 17 03:13 PM

[Northstar10000:]

HE DID NOT EVEN MENTION THE SOCIAL FABRIC RIPPING APPART SO I THINK HIS ARTICLE WAS SOMEWHAT ON THE POSITIVE SIDE.

May 17 04:26 PM

[golfgator65:]

Oh no the sky is falling! As long as all the "chicken littles" keep clucking, the market will continue to climb the wall of worry. There are still a lot of undervalued stocks (particularly with large exposure to China infrastructure) that will continue to prosper. I remember at beggining of March this Davidowitz was calling for DOW to go below 5000. Sure wish I would have shorted stocks based on his reccomendation, then I could be down another 30%! Unfortunately as market continues to go up, these guys will lose their 5 minutes of fame. Then you'll know the market will correct.

May 17 05:28 PM

[Foosie:]

One of the real problems we have on the manufacturing side is that our salaries must compete with those in China. Think about it.

May 17 06:44 PM

[Gregman2:]

The petrification is about the leases they have with the REITs and others. If sales remain as they are now, retailers will soon be defaulting on their leases (in even greater numbers than is now the case). In some areas of the country, retail vacancy rates are running at 40%. That could soon spread. Short of the consumer coming back soon, one must ask: why are rents still so high? If we back out tenant improvements, is not the majority of lease cost a function of debt service to the REIT?

May 17 10:29 PM

[Roger Knights:]

"In some areas of the country, retail vacancy rates are running at 40%. That could soon spread."

For instance, with auto dealerships shutting down.

May 17 11:41 PM

[MarkitWacha:]

I've heard some really bad numbers about the GM/Chrysler dealerships closing. Has anyone done an analysis of this impact somewhere?

May 18 08:53 AM