The storyline of retail recovery is false. It will continue to be false based on pure mathematics and demographics. The fact is that REAL retail sales, adjusted for population growth, are at the same level as 1999 and still 5.3% below the debt induced peak in June 2005. That doesn’t sound catastrophic until you take into account that delusional retail CEO’s across the land added 3 BILLION square feet of new retail space since 1999, bringing total retail square footage up to 15 BILLION. That is approximately 50 square feet of retail space per person in the U.S.

Retailers judge themselves upon sales per square foot. If you add 25% more square feet and achieve the same level of sales, guess what happens to profits? When you see the MSM crowing about Home Depot’s tremendous sales and profits, they fail to mention that they are still lower than they were in 2007. Retail sales have peaked for this cycle and are headed down. With 10,000 Boomers per day turning 65 years old with no savings, the future for retail gets bleaker by the day. There have been quite a few announcements of store closings by major well known retailers in the last few months, but we are only in the 2nd inning of this ball game. It won’t be over until the 15 Billion square feet is whittled down to 10 Billion square feet. If you were thinking of buying JC Penney, Sears or RadioShack stock, you might want to think twice about it.

The best investment today would be in the company that makes SPACE AVAILABLE signs.