The End of Retail?

During the early stages of the recession there were all sorts of “structural” theories of unemployment.  One popular theory claimed that housing had been overbuilt, and hence the job losses in home-building were due to “reallocation” of labor, not falling AD.  That idea never made much sense as an overall theory of unemployment, as aggregate employment held up well during the great housing crash of January 2006 to April 2008.

Another theory pointed to the “end of retail,” the idea that retailers like Border’s and Circuit City were becoming obsolete dinosaurs in the age of Amazon.  It is possible that retailing will gradually decline over time, but we now know that the huge drop in retailing jobs during 2007-09 had nothing to do with the end of retailing:

A loss of 1.2 million retailing jobs during 2007-09.  And it was mostly due to falling AD.

About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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