In the same way I’m bothered by the “best vaccine evah” cheerleading, so too am I by the pervasive back-slapping about how marvelous the US economy is. Given that real estate has a way bigger wealth effect than stocks, and real estate values are crazy right now, personal chicken-counting among the top 20% may have a lot to do with the giddy mood. Even my mother’s house in Alabama has Zillow assigning a nutty number to it.
So I’m asking for reader input from their areas to help flesh out this picture. I’ll throw out a few factoids.
The press is also reporting the difficulty restaurants and retailers are having in getting workers back as a sign of a hot labor market. But labor force participation is below pre-Covid levels and markedly below where it was before the financial crisis:
Other experts have argued that the apparent increase in wages is merely a return to the pre-Covid trend line. Economic Policy Institute yesterday debunked the illusion of a surge in the restaurant/hospitality sectors:
One of the most widely discussed data points from last month’s jobs report was the rapid acceleration in wage growth for the leisure and hospitality (L&H) sector, particularly among production and nonsupervisory workers. This sector-specific wage acceleration (not seen in other sectors), combined with disappointing economywide job growth for the month, launched a huge debate about potential labor shortages. We wrote previously about why concerns over labor shortages were largely misplaced. Among other things, the rapid wage growth in L&H was accompanied by very fast sectoral job growth, so there was no evidence that any labor shortage was impinging on overall growth.
Further, this acceleration of wages in L&H might provide less evidence of even a sector-specific labor shortage than previously thought. When economists or other analysts express concerns about labor shortages, they generally mean a shortfall of potential employees that forces employers to gouge deeper into their profit margins to raise wages to attract workers. At some point this gouging will become unsustainable and so hiring will lag.
However, there is compelling evidence that the wage acceleration in L&H in recent months is not driven by employers raising base pay to attract workers, but instead by just an increase in tips stemming from restaurants filling back closer to pre-COVID capacity. Put another way, since December 2020, the rise in tip income, not an increase in base wages, can likely entirely explain the acceleration of wages for production and nonsupervisory workers in restaurants and bars. If this is the case, the wage acceleration will stop when restaurants get back to normal capacity.
Countering this cheery picture is business closures, expiring eviction moratoriums (and squeezed landlords), and businesses not back to their old revenue levels. Start with airlines, although they are assured bailouts, so they don’t count. My chiropractors in NYC and down here have fewer patients seeing them. I am told DisneyWorld is operating at half capacity to reinforce the notion that they are safe (they won’t even allow pictures of children on premises with masks accidentally off). My contacts at Lowes in California say sales are off: all that at-home nest primping is off for now as people are eager to get out and about. I see confirming data here: it was too easy to get a subcontractor to do a small job and he was willing to do it right away.
And some businesses are getting whacked by high commodity prices. A friend who has a very successful small and high-skill manufacturing business is crying over copper.
Down here, we have very few vacant store-fronts but freeway traffic is lower than pre-Covid. New York is admittedly a special case, and looks way better than it did last summer and fall, and I am told Brooklyn and Queens have taken much less in the way of an activity hit than Manhattan. However, there are lots of scars in the form of empty venues (which makes Covid look worse than it was; retail was getting hollowed out on Fifth Avenue and other ‘hoods before that) and not busy enough sidewalks.
Enough nattering. How about you?
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Best way I can describe it is that there is now an underclass. Always was. But now there is one that is larger and sticky/persistent.
For instance, you see many more itinerant people. A neighbor hosted a guy who hangs out in a car in the driveway all day. Why? I don’t know. Likely jobless and homeless.
I got approached by someone panhandling outside a restaurant I’ve gone to for years. First time for that.
These folks are good at staying invisible for all the regular social reasons. In a time where social media appearance is king, they have smartphones and accounts and you see them on their phones most of the time.
It’s very strange and disconcerting.
Should also say that meanwhile, in rich areas, the boom is on. If you serve the rich in some capacity (landscaping, utilities, whatever) you’re doing great. If you do not serve the rich you are out of business.
“If you serve the rich in some capacity (landscaping, utilities, whatever) you’re doing great. If you do not serve the rich you are out of business.”
Abso-freaking-lutely. A wordy but relevant dispatch from flyover country follows.
My wife just retired as of June 1st from 42 years as a pastor. She is 61; this was possible because A) whatever else befell her professionally, our denomination has a real live pension plan that she was been paying into her entire career; B) this pension became available to her at age 60 – just like Social Security, you get less overall, but COVID-19 made it quite plain none of us know how long we’ve got. (Sparing everyone a long screed about Christianity in 21st America… you’re welcome.)
Since her current assignment included a parsonage as part of her compensation, it was time to buy a house to retire in. Having friends who retired to a historic mining town in the mountains of southern Colorado – name omitted to avoid further contamination by Denver money people and Texans – we started looking at houses there.
Same real estate mania there as when we moved from Lincoln, Nebraska to Omaha in 2015 – bidding wars, cash offers, purchase prices higher (much higher sometimes) than asking, etc. However, our secret weapon was NOT having to wait to sell an existing home, and having funds available from the sale of our Omaha townhouse in 2019. Having a stellar financial advisor the past few years helped tremendously.
So after the usual mania around buying a house – our ‘new’ 1904 home was rehabbed thoroughly by a ‘flipper’ – and we are adjusting to life at 6,000 feet after decades in Nebraska at 2,500 feet. Whew!
1) The underclass is growing but weirdly. Life in rural Nebraska the last two years – one pre-COVID, one during – made it clear that now more than ever, it’s good to be rich. “Rich” in farm and ranch country is rather different than in towns and cities: the rugged looking old fart in the beater pickup might own hundreds if not thousands of acres, the old place, as well as a house in Florida, Texas or Arizona for the harsh winters. Maybe even an ag processing business or two.
But his kids may or may not want to stay in farming or ranching – it’s lots of ass-busting hard work regardless of commodity prices, and the ag robots (such as they are) are years and millions of dollars away. Not a lot of undocumented workers around, but they exist and do their level best to remain invisible. Meat packing plants another story – where is today’s Upton Sinclair?
Local labor pool slim and precarious. Underclass here includes LOTS of dysfunctional families – drink and drugs still destroying people per Case Deaton – as well as crapified educational systems (thanks, cheap ass state legislature!) and the Trump virus, which has parasitized rural conservatism – see also Iowa and South Dakota. Forty years of Reagan worship and Limbaugh BS on every AM station (FM doesn’t travel well) factor in as well.
2) Our move from rural Nebraska to Colorado included a flight to New Orleans for a nephew’s wedding prior to loading our world possessions into a large rental truck for transport.
Flights all packed; no drunken mask rebels anywhere. Would guess that most passengers over 50 were like us already vaccinated. We double-masked anyway.
Every eatery we visited, whether in Denver, Atlanta and New Orleans airports or the French Quarter in N’Awlins, was understaffed. Ferociously busy and efficient line cooks bolstered the occasionally underqualified and overwhelmed wait staff. LOTS of empty vendors in all the airports; some saying July 2021 re-opening but most not.
3) The move to Colorado involved driving nearly 700 miles through a two lane “Blue Highway” route our friends recommended due to lots of Interstate repair projects. Also, 26 foot long straight trucks driving 65 mph on the Interstate don’t win friends in surrounding traffic. No road rage shootings here in the sticks yet, but…
Good time to be a semi driver apparently, since they were our constant companions and relatively well-behaved. About two thirds semi traffic, other third split between smaller commercial vehicles and regular cars/trucks/SUVs.
Truck stops and Quik Shops, same as airports – a few savvy and competent employees plus others of varying skill.
4) Historic little mining town encapsulates everything going on in America. Legal marijuana has solved LOTS of tax issues here; some wealthy locals and other investors rehabbing cool old buildings; post-COVID it’s likely to do well. However, there is NO library in the local elementary school due to funding (we may get involved in this local issue – education is literally what kept our entire family out of the underclass) and this is great place to live if you’re retired and have money/property/insurance/etc., fairly sketchy if you’re young and/or trying to do the whole American dream thing of career/home/kids.
So our adventures continue. Finish unpacking, finish acclimating to altitude, prep for influx of friends and relatives – wife’s family has had a camping trip/family reunion in a national forest an hour or so from here for the past 40 years – and see what the future brings.
“Pray to God, but row away from the rocks.” HST quoting an old Russian proverb
Great post, good to hear about your new spot.
In PA it seems like we lost maybe 1/4th to 1/3rd of restaurants, depending on locality, so those that are left can count on business. Imagine 25% of your competition evaporating overnight, or, if you’re in a niche, 100% of your niche competition evaporating.
Incidentally, one pizza place has been giving to charity like mad because they cannot sell too many pizza pies. At the same time, the wage structure at the restaurants suck, so nobody in their right mind would take the job. My local deli was searching for a line cook for about 9 months, though that’s not unusual, since line cooks are often strung out because the job is so crazy.
A restaurant entrepreneur I once knew has been in the news as a major campaigner for the recent PA constitutional amendment curtailing the governor’s power to have a state of emergency. It looks like his get out the vote work paid off. He had to close at least one or two branches of his restaurant last year and apparently was pissed off about it.
Colorado is no. 10 in per capita income. Yet its investment in schools (including from local taxes and state and federal-shared revenues) ranks 37th. Ironically, Colorado ranks second in educational attainment (third if D.C. is included). I guess the state imports many of its educated residents.
It imports its income which is the same thing.
it imports it’s wealth effect…
https://www.federalreserve.gov/newsevents/other/o_bernanke20101105a.htm
I put a bid on a house in the middle of PA on 25 acres with a small house on it last week. The first day it was posted it had multiple bids. There is an option to ratchet up your bid up to a maximum amount. I bid 10% higher than the asking price. Someone came in with a cash offer the next day and the house sold in less than 48 hours.
Like many I thought I’d put some of my retirement money in real estate as a hedge against inflation, but I’m done. I’m not going to do that again, too stressful, it’s a seller’s market as Wolf Street has pointed out. I’m just going to sit on my hands for a while and hope all those printed trillions don’t completely dilute my savings with accelerating inflation.
Another indication of the economy is picking up (for a segment of the population) is the volume of travelers at FLL airport over memorial day weekend. I’ve not seen such traffic in and out of the airport since pre-CV19. Same with friends going from PIT to LAS.
Anything rural in PA is scorching hot right now. But honestly, before the crisis, it was also hot. I was looking at undeveloped land up in north central PA and could not find anything affordable whatsoever.
Fracking is pretty much a bust, so I imagine a lot of that money will evaporate over the next 10 years.
Our rural western Kansas experience is quite different. Selling our 4 bed- 2 bath house for $77K. Have lowered price from $88K to $77K, received two offers since March. In eastern Kansas would be double. Very little ‘culture’ jobs etc. One needs more than cheap housing to relocate out here apparently. Like the future, prosperity is not evenly distributed.
I live in a small city in the midwest whose major industry is tourism. An interesting thing that happened here is that new seasonal routes from the legacy airlines were added via their regional carriers. Many of the major festivals were shutdown for the second year in the row. And we’ve seen the schizoid ‘Please accept our apologies as we’re short staffed/Now Hiring – Starting Pay $15/hr.” Many businesses closed up for good.
$15/hr goes pretty far in small-town Midwest…..unless gas >$3 and a clean 10 year old used car retails at almost $20,000.
Another testable hypothesis about the labor shortages….gasoline and car price inflation is a barrier to returning to work for many.
used car prices are INSANE! at the auction and retail level.
woe to the person who absolutely needs a new used-car but have limited means.
It’s the lack of affordable year-round housing that’s the killer up here. Gas is pushing just a hair over $3/gal and good rides are around $15k, and public transportation is sparse. The largest employer is the hospital.
Report from Ireland here:
Ireland has done proportionately better economically than any other EU country, mostly because the core economic generators (IT services, medical devices, banking, agriculture) were not affected, or actually did quite well during Covid. Brexit impacts have been minimised, mostly by ignoring the problem (not sustainable going into 2023), although there has been a slow, quiet build up in investment from relocating businesses, from banks to Amazon warehouses (previously Ireland was served by Amazon UK). We are just emerging now from maybe the longest lockdown in the world, since mid January.
The construction industry is going full pelt. Even, unbelievably, hotel constuction. I do regular walks/cycles around the city and I’ve not seen one site either abandoned or on a visible go-slow. This equally applies to offices and hotels as it does to residential. Property prices are rising very fast, although this may be due to scarcity – i hear many complaints about a lack of available new or second hand properties at any price.
There are, however, constant rumours of a coming crunch in supplies, due to both Covid and Brexit. I’ve noticed that most building sites are opting for in-situ concrete rather than pre-cast (most pre-cast used originates in Northern Ireland), so there is obviously some scope for flexibility, but this may run out when it comes to finishing buildings off. It took my building management company months to source physical fobs for a new entry system. This could be a major issue of completed buildings can’t source specific items vital to allow them to be handed over to clients.
Rents are still going up (a major political issue here), but I suspect there is some collusion going on among commercial landlords as there is increasing visual evidence of empty rental properties. The issue is complicated by the number of people in the city who have returned to rural homes, or more commonly other EU countries to work from home. Tax issues will force many back to urban apartments, but it remains to be seen what general impact this will have.
There are numerous reports of labour shortages, especially in rural areas. The hospitality industry is saying that the usual mainstay of seasonal work, students and school leavers, are simply deciding to take a summer off rather than work and enjoy themselves now they can get out and about. Maybe parents feeling guilty about how they’ve (allegedly) suffered the past year may fund a lazy summer. Whatever the justification, this will be a major constraint on reopening, but will hopefully drive wages up. There may also be a lag as the usual source of cheap labour, east European immigrants and foreign students take their time to return (if they do).
The hospitality industry is just opening up here so its difficult to judge the number of casualties. Certainly many will not reopen, especially if they’ve been unable to negotiate lower rents. One of my favourite little cafes looks to haven been a casualty, but on the plus side it seems that desperate landlords have given special deals for new restaurants – no less than three vegan places have opened in my neighbourhood in the past 18 months.
Pubs have been hit very, very hard by covid, restaurants less so as many have focused on takeaway in one form or another. Its hard to say whether small family pubs have suffered worse than commercial ones. It also remains to be seen if this drives a deeper change in behaviour. People are now more used to drinking from home (or in the Park).
My city council has proven itself to be entirely worthless and incompetent. They have failed miserably to promote outdoor dining for the summer (they seem to have convinced themselves that Covid would be over by the summer). They are actually restricting open spaces in a desperate attempt to stop young coming into the city to do terrible things like sitting in the sunshine with a drink. Other councils have been more far sighted, and weather permitting, might protect their small restaurants and bars by stopping traffic on the streets and allowing people to enjoy themselves in the open.
Rural areas have been complaining, and the shut down has hit bars and restaurants hard, but for the summer every hotel and rental cottage is booked solid, often at hugely inflated prices. The tourism industry has complained long and hard about restrictions on flights, but Ireland runs a net deficit on tourism spending, so people taking home vacations is likely to more than compensate for a lack of foreign tourists (not that this will stop them complaining of course).
Agriculture has been generally fine. Good weather and Brexit has been good news for farmers. The price of lamb is high which is good news for the poorest farmers, if not for the lambs.
The big cloud on the horizon though is the Indian variant, or whatever number its been given now. Its a gift from our neighbours and it may well outrun vaccinations.
Pfizer and AstraZeneca have both said that their shots work against Indian variant.
Ivermectin also appears to work against them. Citation:
https://covid19criticalcare.com/videos-and-press/flccc-releases/new-guidance-on-ivermectin-from-the-all-india-institute-of-medical-science/
To add to this;
Re labour shortages: A few years ago I helped a Polish friend get Irish citizenship – She’d been in Dublin for well over a decade at that point. She really wanted to buy a house or apartment, but couldn’t find things in her price range (despite working in a decently paid job for – you guessed it – One of the more successful covid vaccine makers. Being single, she didn’t stand a chance against couples.).
When the lockdowns kicked in last year, she went to work remotely in Poland, saved every penny she should, and just last week she moved to the states for a new job! Many of those foreign workers which have become central to the economy are simply not coming back.
A large number of other mainly European friends also returned to their home countries to work remotely, and almost none of them will return. Another example; a manager at leading consultancy (again, a job which should put you firmly in the white collar bracket) who returned to France because he was tired of trying to conduct client calls in his house shared with 5 other tenants.
Re property price and rental increases: Ireland already had an issue with unsuitable residential property, mostly due to a shortage of apartments. Most single individuals were obliged to live in a house which had been constructed for a family, but now contain multiple young professionals. Much like how Italians used to live at home until they got married in their late 20s, those in Ireland essentially live with an adoptive family until they find a partner.
Unfortunately, in my hometown of Cork, it would require both partners in a relationship to earn 1.5 times the average salary each in order to be approved for a mortgage for the average house – and over 60% of properties are selling for over the asking price. In effect, a generation of residents of Ireland are stuck waiting for the right conditions to start a family.
I think those that think they can work from home in another country might get a rude surprise. For tax reasons, I’ve heard that most large companies are insisting that staff return to Ireland as soon as possible, even if they still have to work from home.
I think the evidence suggests that the shortage of accommodation is coming to a close, thanks to people moving away and the surge of new supply recently. The problem is not availability, it is cost. I’ve noticed that slowly but surely mortgage rules are being relaxed (a very bad precedent in my opinion, this will just fuel house price inflation), but I strongly suspect we’ll see rents drop as there seems to be a lot of new supply on the market that isn’t necessarily getting taken up. I think corporate landlords are content for now to keep units empty in order to maintain the illusion of rising rents, but thats not sustainable for them in the long run, eventually rents will be forced down.
My hypothesis is that a chunk (but obviously not all) of the labor force participation stagnation is due to lack of pre-school availability, which has been largely ignored by the pundits as they focus on the situation in public schools.
In my neck of the woods while the public schools largely have returned to normal, pre-schools aren’t returning to normal until the autumn as the headlines from Biden officials about possible 3rd/4th waves in the winter and spring caused many programs to preemptively close their doors for the summer given slack demand from parents and uncertainty around the return to stricter lockdowns.
after reading Howard Beale’s comment above….my guess is that car and gasoline inflation is the #1 or #2 explanation of the bizarro-world labor participation rate.
Don’t recall many pundits talking about used car prices and the labor market
Yes for the outlier regions. One other unsung problem for the “lower working class” is the lack of reliable public transportation. Our half-horse town has a semi-regular public transport system. It serves the main streets, and starts at six in the morning and ends at six thirty at night. It takes Saturdays and Sundays off, plus, no Holiday services. Try holding down a low wage service job with those schedules. One person I spoke to about the jobs situation last year mentioned the irregular and ever changing work schedules in fast food businesses. Her employer even tried to impose “on call” for minimum wage employees. Even the Covid mess has not dissuaded employers from trying to squeeze the most “value” from out their employees. Wages are up, a bit, but working conditions are still terrible.
I work at a small family owned restaurant in Milwaukee as a server, make far less than minimum wage. We have on call and have had it since I started In September. A couple years ago I worked at a pizza chain for minimum wage and they had on call as well. Worst they were on-call at ridiculous hours like 12-2am. This was back in 2016-2017. Alot of this stuff isn’t new.
Ouch! It seems I am, yet again, insufficiently cynical in my musings!
I was a waiter in New Orleans French Quarter restaurants back in the 1970s. The ‘service worker’ minimum wage was less than a half of the “standard” minimum wage even then. Tips were a craps shoot. Every night was different.
I wonder when “on call” became an industry standard?
Re: used cars and labor–Wolf Richter is a former car sales guy with wide and deep experience in th’ biz. He regularly parses the used vehicle market in his WolfStreet online blog. His figures seem reliable.
This ties into what cocomaan indicated. Our business(yacht commissioning, up fits, etc.) serves the rich. Busy as heck for the last 2 years. Now, simple parts that used to come in a day or two after ordering, are not showing up. Shortages and delays of many items have started to be the norm since Feb. These shortages and a rosy outlook seem at odds…
Thank you, everyone.
Further to Cocomaan and Doug, a former colleague’s brother, an airline pilot, was made redundant from his now bankrupt airline in the summer 2019. He has just been hired as a trainer for a firm operating private jets. Two trainers were hired from over 1000 applicants. Apparently, this sector is booming.
Further to PK, in my TBTF employer’s case, over a quarter of its UK staff are being laid off over this year, including me, as business relocates to Dublin, mainly, and Berlin, for political reasons. Some posts are going to Frankfurt and Singapore. With regard to EU posts, only EU citizens need apply. Applicants must also take a 25% pay cut and fund their relocation. The TBTF expected a third of staff to apply. They got half of that.
Locally, around the Thames valley, all sectors are experiencing shortages of labour, often due to Brexit. Farmers are scaling back production, especially livestock, and often switching from livestock to arable.
The motor racing teams and Pinewood studios, located at either end of Buckinghamshire, are looking for sites in the EU as migration rules disrupt activity and labour shortages are increasing costs.
House building is accelerating as demand from people moving out of London increases.
Colonel:
As always, you provide telling details. Yet you gloss over your own situation. You’re being laid off? Any plans–too soon to tell? taking a year off? heading to a monastery?
Col.S, I’ve very sorry to hear you’ve been included in those lay-offs – I hope you have a good parachute.
Thank you, DJG and PK.
The parachute was reasonably good according to the employment lawyer I engaged. Pay outs have been scaled back over the past year as the TBTF basket case needs to cut costs by a billion EUR annually for a few more years and redundancies have increased in pace and volume over the past year.
I think about leaving financial services and doing something else or doing some volunteering for a year and testing the City waters next year. Headhunters counsel against both and say to get back in ASAP.
Seconded.
Thirded.
How is the horse racing sector faring?
Thank you, Ambrit.
The sector is suffering from Brexit as the paper work makes moving horses for breeding and racing more complicated and expensive. That has encouraged some owners, breeders and trainers, but not as many as forecast, to invest in France and Ireland.
The biggest problem is the lack of prize money, something that goes back fifty years. Bookies need to pay more for the asset that generates much of their turnover. Either that or, very unlikely, a Tote monopoly is established, but that ship sailed in the 1950s.
Yes, Good Sir; a Tote monopoly would be a good idea. However, as recent history has shown us, on both sides of the Atlantic, “good ideas” are anathema to the political class. Not enough campaign donations associated with the ‘Public Good.’ (I can see a New Cromwell coming along sooner or later as a result.)
Silly idea in the “Green (banknotes) Zone.” ‘Network’ with some associates to start up a Public/Private Tote Monopoly? [I’ll wager you’d find plenty of Tory money chasing that unicorn.]
Silly idea in the “Green (growing) Zone.” Use your evident expertise in matters equine and start breeding and raising Shire Horses for the eventual “Back to the Earth” recovery phase of the climate crisis? I know, I know; ‘real’ farm work (I have done a bit before,) is nothing like playing “Farm Families” on the Internet.
You stay safe now!
Thank you, Ambrit.
There’s good racing from tomorrow and over the weekend from Epsom, Chantilly and Belmont.
Imagine if one of the 1/6 rioters had read enough history to use the Speaker’s podium to deliver that shiny bauble speech.
Thank you, David.
Late to comment here. So sorry to hear that you will be laid off, Colonel. Your TBTF will be the poorer for it though they have not realized it yet. It will be a change for you watching that particular dumpster fire from a safe distance. Here’s hoping that you will be quickly falling on your feet in a new job, even if in a new industry.
Thank you, Rev.
I am very grateful.
I was in my local West Marine store the other day to buy some shock cord. The manager said the last year was the best year the store had ever had.
Side note: Even though we are going into summer, the sailboat listings on Craigslist for Portland/Seattle seem down from years past.
There are no boats to sell. They sold out of new boats last year. A sales guy at a marina I know said he only had 2 boats, both over 100k, left to sell of 2021 models. That was in February.
There is something going on and it is not just all Corona and China. Already during 2018 we were getting six months lead times quoted on stupid stuff like 6 mm fixing screws and braided flex-conductors. It seemed random at the time, now it is becoming more systematic and progressing into higher-level things like CPU’s.
At the same time, everywhere I go, and I do hikes and runs of 20 km in the area, houses are popping up, ground is being broken, renovation is happening, optic fibre is going in. I see many more dead trees.
I can’t help the trees but warching all this activity, I put my house up for sale yesterday: When all that new supply hits the market, my hose will just be an older house in need of renovation, whereas right now, it is one of the nicer ones of 25 in the area, so it’s take it or go live somewhere else.
But, still, I feel that something tectonic is happening. Maybe the aliens have increased their tributes!?
I am a builder/remodeler, and while there is a lot of building and remodeling happening, I am not getting calls anything like, say, in 2006, at the height of the housing bubble. It is maybe at pre-pandemic levels, for me anyway.
Lumber futures hit 1670 a month ago, and have dropped to 1267, when they were 649 in January. Yet the price of a 2×4 stud continues to go up – at The Home Depot yesterday they were selling the premium (trash) studs for 10.45. Two years ago the same stud was going for maybe $3? There is serious gouging going on at the producer and distributor level, a pandemic excuse for greed, such that demand would be much higher if it weren’t so. It will be so until demand crashes, which I expect it to, by end of summer.
I am perplexed by this. There is a TON of building going on, among the big dog builders. A lot of that was in the pipeline before the pandemic, when all the talk was housing crisis. Now we have what, 10 million people owing back rent, moratoriums on getting kicked out soon to end, at the same time rent is likely to increase because of the cost of real estate and and the cost of building being so much higher because of commodity prices? There is a big build across the river in St Paul at the old Ford site, some 30,000 units, where whatever profits there might have been for Ryan Companies I would think have evaporated from the cost of materials. But no one is talking about it. Something has to give. I expect a wave of bankruptcies at some point in the not too distant future.
Is anyone talking about “nationalizing” some of these ‘distressed’ properties yet?
If the public is going to bail out the building sector, it might as well get value for it’s money.
Add in the ‘new’ management jobs for the PMC class to run the new “public housing” units and we get a ‘win-win’ situation.
Possible the big building companies have locked in prices for their projects before the materials started to spike?
Might see them end one project and not find buyers for the next at the new rates.
Of course, it’s also possible the rate increases you’re seeing don’t apply to the big boys, and its only the regular people being gouged.
locked in prices
I see lots of lumber at mills, more stacked up in front of them than at any time in the past decade. It’s not a lumber shortage.
I’m also seeing lots of people on tiktok doing videos on how to build with crooked lumber.
bob
Are there any videos on how to lumber along with crooked builders?
I am sure both SKANSKA and PEAB has them as part of their mandatory training experience.
Northampton MA Main Street businesses closed last year (off the top of my head…so many are gone that the places that remain have large “We’re Still Open” signs.)
Bistro Les Gras
Convino Wine Bar
Viva Fresh Pasta
La Fiorentina (bakery)
GoBerry (restaurant)
The Artisan Gallery (art)
Faces (gift shop)
Silverscape Designs (jeweler)
Cathy Cross (women’s clothes)
The city has allowed local restaurants to set up outdoor tables, complete with jersey barriers to protect them from traffic. Non-restaurant businesses are not happy about this, because these have taken up about half the downtown parking spaces.
Down the road at the Holyoke Mall, department stores, home goods, etc. have closed, replaced by fitness centers and game arcades.
The good news is that Smith College has partially re-opened, without any infection incidents. The loss of 2,500 students was a real kick in the teeth for all local businesses.
There are still people living in tents under bridges and on a sort of wasteland east of town that borders the Connecticut River.
>”… these have taken up about half the downtown parking spaces.”
The same thing was done in one of my ‘local towns’!
It has changed into such a tourist destination since I left Colorado 9 years ago, a friend very appropriately renamed it “Aspen on the Arkansas (river)”. Lots of money being spent. Much wealth moving in.
I’ve seen “help wanted” signs, but the high cost of living there is a huge deterrent.
Numerous breweries with outdoor (in the street) dining and drinking have replaced way too many parking spaces, as well as businesses.
The town even closed one block completely to traffic.
Even my landlords old mechanics shop is now a brewery, with the sidewalk occupied by outdoor dining!
Parking was already a problem there before I left all those years ago.
As an artist I inquired in various shops there and elsewhere regarding consignment fees.
They are now 50%, even in small towns that only see business during summer months.
When I left, the going rate was 30%. Ouch.
I’ve no doubt that’s generated by the much higher rents for both housing and commercial (in addition to some greed involved, no doubt. Especially in smaller venues that lack the sales volume to warrant 50%).
It seems the only thing that ‘trickles down’ is the increased cost.
The fast food places have been replaced by restaurants with $12 hot dogs and $15 burgers (housed in former Burger King, KFC, and Taco Bell). And lots of breweries.
McDonalds is the only fast food restaurant to have survived the transformation and often has the drive-up backed up into the highway.
The only other ‘cheap’ place to eat is a Sonic but they have a problem keeping employees. I suspect that’s due to low wages on their part and poor tips, as the wealthy don’t eat in their cars.
Prices on homes–or even raw land, are completely insane. All over the state.
It brings me to tears each time I look, wondering how I’ll ever be able to afford a home again.
Colorado raised their minimum wage some time ago, but with costs so high it still doesn’t amount to a living wage.
https://cdle.colorado.gov/wage-and-hour-law/minimum-wage
A top story on local news this past week was about a serious lack of housing in Summit County (where Breckenridge is located).
That’s always been a problem. Even when I worked for some months a decade ago doing a construction clean on new condos, I discovered that the majority of the housekeepers were from other countries (Africa, Jamaica and Mexico), and sometimes lived with 8 or more in a 2 BR apartment to be able to afford the rent.
Now, it seems, they’re having trouble hiring because no one can afford to live anyplace near enough to work there. The county is looking at building ‘affordable’ housing for employees.
https://www.summitdaily.com/news/local/summit-county-towns-discuss-emergency-declaration-as-affordable-housing-shortage-intensifies/
Good article, that spells it all out well. Worth a read.
“Aspen on the Arkansas” (closer to me) has grown into such a wealthy place, with plenty of money flowing around but too much traffic and many tourists, that I now choose to head south, instead, to an even larger city to do my necessary shopping.
I’m still getting familiar with it, but it’s nearly the same distance away and I avoid going over a pass.
Regarding work, I can’t speak with much experience about that, other than to say that in the rural area where I live there are no jobs unless, I’m told, you want to become a budtender for one of the numerous pot farms that have sprung up here in the valley.
No idea what they pay.
You must pay to get licensed and are paid in cash, but taxes are still taken out.
THAT has been a flourishing business 2012 when it was legalized here.
That was also the year I was evicted from my beloved home, as I watched real estate prices increase dramatically with so many people coming here in droves as it was one of the first states to legalize recreational.
(A girlfriend said her favorite bumper sticker is, “You came. You got high. Now go home”). I agree.
My son works as an I.T. and lives in a suburb of Denver.
He’s having trouble finding work that isn’t contract, with no benefits. That seems to have become prevalent among employers now. It stinks.
HIs last job ended (his third ‘contract’ job) and he’s trying to hold out for a ‘permanent’ job. He’s been VERY active in his job search.
He and wife have savings and she’s now full time in a grocery chain @ $20 hr, as a supervisor (and finally, medical now that she’s been there a year), but he’s afraid he’ll have to resign himself to once again taking a contract job if their savings become too depleted, as her income doesn’t cover all the bills.
Regarding local contractors?
My only experience was with local ones we hired–and had to fire their work was so bad, as they bounce from job to (any) job.
Hard to base employment when they’re the example.
Lots of building of very expensive homes going on in this state, so I’ve no doubt good contractors are being kept busy. Many McMansions yet to build! (before it all comes tumbling down?)
Me? I’m finally living in a former 374 sq ft shed on someone’s property that’s been remodeled into a home.
It’s super cheap (though I spent LOTS of money remodeling, plus many hours as I did much work myself).
I can’t even afford to rent a ROOM in someone’s home with current prices so I’m grateful for this place.
However, my landlord is older than myself (I’m turning 70), and he has many health problems.
If he should die, his kids will want to sell this place (his home and land–which includes my place), immediately and I will be completely homeless, so I remain a nervous wreck while scrambling to make money.
I’m now squirreling away my meager income (SS), waiting for the next crash which will then hopefully enable me an opportunity to finally be able to afford something of my own again, while also trying to figure out a way to sell my creations and framed photos to add to my tiny savings (in addition to making enough to publish my first children’s book using my actual photographs of animals).
Pretty sad, that I must hope for a crash to try and get my life back…
I’m in Atlanta and been WFH since March 2020, so it difficult to observe whether or not the usual commute patterns have made even a partial comeback. From the sounds of the traffic reports, they haven’t. With so many not going into offices I suspect that businesses that depend heavily on office workers for lunch business are not going to make it. A couple anecdotes:
1. There are a few small business creations happening here and there, despite the alleged lack of workers. An empanada joint sprung up in the strip mall near me, where some other business had gone belly-up last year. Another local restaurant shut down in December because the owner couldn’t come to terms with the landlord on a rent break. He’s re-opening soon in another strip mall that had a bunch of vacancies. Good for him, I hope he got a nice break on his rent but he had to close for at least 6 months and deal with moving. I suspect the old CRE landlord had to take his medicine and drop the rent anyways to attract a new tenant, but I don’t know that for certain.
2. Good luck finding a new car, or not getting ripped off on a used one. We started looking for a vehicle to replace an older one and it is slim pickings. The sales folks we talked to all mentioned the chip shortage, and only base models with limited options are available, if you can find them. Meanwhile used car prices have gone crazy, as Wolfstreet has pointed out. They’re taking full advantage of the new car shortage by jacking up prices to the point where you’re going to pay as much for a 2-3 year old model with 50k miles on it as a new one. The problem is, good luck finding a new one. I don’t see how the auto makers don’t suffer here. Ford, GM, etc. are going to have very low sales over the next few months.
I also expect a wave of bankruptcies in the coming months, as PPP money runs out and businesses that survived the initial pandemic shock face the reality of higher input costs they can’t just pass on to their customers.
Here in Boise things are pretty insane. There are “Now Hiring” signs everywhere and McDonalds is holding a drive through recruitment in a few days. They want to hire 500 new employees for the valley and they are offering a whopping $13/hr minimum wage. But Amazon is opening a new facility in Meridian and they are paying $15/hr minimum wage.
It is impossible to find a handyman or someone to pick weeds no matter what you offer in payment right now. I needed some help but have been unable to find anyone to do things for me, like change out the pot lights in my 18 foot ceiling. I am no longer allowed on ladders so there is a lot of work that needs to be done in my house that I just can’t do any more. Trying to buy things like window blinds or carpeting has also become a real problem – you have to wait months.
Restaurants are crying buckets of tears because they can’t get people to work for the same wages they made pre-pandemic and they want the state to end enhanced unemployment payments. These people all claim to be libertarians, but when push comes to shove, what they want is to force people to work for them. So much for the ideals of libertarianism, huh?
It is extremely hard to find reasonably priced housing, even rentals, in Boise right now, and it is virtually impossible if you have pets. I just sold my house, pending inspection, for over 2 1/2 times what I paid for it seven years ago. It was on the market for only a week, even with all the things like burned out lights and other cosmetic things that needed to be done that I couldn’t find a handyman to do. What saddened me was that there were very very few families or young people who looked at the house. Most of people who came to the open house or private showings were investors who sold property elsewhere and had to invest the money ASAP (IRS 1031 buyers). So my home will become a high priced rental after I leave!
Food prices are high here – $7.00/lb for hamburger, but they’ve been high since early in the pandemic so I don’t see the increases in prices in the beef market that seem to be happening elsewhere.
My sister and brother in law run a business in the Flathead Valley of Montana. Recently an employee of ~10 years quit and moved out of the state to Nevada. (Their business boomed all through Covid.) His rental had been sold to someone out of state and would no longer be available as a long term rental. He could not find anything to rent in the Valley, so he’s selling most possessions and moving.
My sister is in Rotary and anecdotally other business owners in Rotary have had the same thing happen.
The number of long term rentals is declining and the remaining units are getting more expensive. Out of state buyers are buying to 1) have a 2nd, 3rd or 4th house to vacation in 2) run as a VRBO 3) some work from home activity 4) investment. No one buys to run a long term rental.
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Locally – The house next to mine sold 11 months ago for $397k. It is on the market now for $450k. (Zillow has the value at $492k *cough*) The first weekend there was a lot of traffic, but the interesting thing were the conversations I heard as people came out the door. Most thought it was overpriced. Even the brokers were telling people this wasn’t the one.
My nephew from Denmark just visited for a few days. He told me that in Denmark people are not allowed to buy houses for rental purposes. People can own two houses provided the second home is their summer cottage. I’m sure that there are ways to game this scheme, but on its face it appears to support the long awaited euthanasia of the rentier.
I would guess Denmark also has stricter rules about foreign buyers.
Probably alot being snapped up in the USA is by people that aren’t even in this country.
Foreign buyers cannot buy Danish homes, except Blackstone & Co can, by having a subsidiary registered in Denmark.
In some areas of Denmark there is no residence requirement so one can buy a regular town house or a flat as a summer house / secondary home. Unless it is specifically in a “summer house / vacation area” there are often restrictions on renting it out to holiday makers.
In the planning permission for my “residential” summer house it specifically excludes renting rooms or short-term rentals. Of course in reality …. In Copenhagen, many people just move out, keep their old appartments by selling/renting them out to a company (that they own) and then they can rent the flats out through air-bnb. The city coucil and skat.dk (IRS) bust about a dozen every year, which will never make any dent in the Copenhagen property market. Which is not the intention either, they just have to pretend enforcement is not a complete farce.
Whenever there is the mere risk that property prices will perhaps not grow this year, the government will congress with the banks to launch some inititive that will boost the market. With base rates being negative they are going into stupider and stupider stuff, like perpetually postponing the assesment of property taxes because “IT-problems”. Lately we had the spectacle of the Danish National Bank, those who sets the negative rates, whining about how politicians should “do something” about the risk for a property bubble (a bubble that has been obvious since, about 2015 at least).
Nothing will happen though. If people want an affordable home, the have to move out to the regions. Carreers in business are way overrated anyways, I think this was the take-home lessons from Corona.
Here in the Upper Valley(NH/VT), housing market is ridiculous. My former neighbours bought a tiny little place where they’re going to get slugged with taxes because nothing else was available in the area, and they were lucky to get what they got. I think they way way overpaid for what they got(I looked it up last night and was horrified), but that is how things are rolling around here. They overbid and wrote a letter to the seller. Multiple offers, bidding wars, cash only, stuff selling in a couple of days, and ~40% of buyers this past year were from out of state. It’s pushing the locals out. The rental market is just as bad-just about no openings in a 45 minute drive radius. Even land is getting unaffordable. I had a job interview with a company that would’ve greatly increased my salary but had to drop out midway through the process because I couldn’t find a place to live.
I went to our commercial district this past weekend and the KFC/Taco Bell sign said “Hiring-$1000 bonus”. The last time I went through it said $14 an hour. There had been several companies advertising on the radio station but I haven’t been listening this past week. VT Castings was offering $22 to start, FT, bennies, etc. I think Ruger was offering a $1500 signing bonus and interviews on the spot at a hiring fair. Childcare is still a major problem here. There are limited spots if any, and I was told people couldn’t get their young ones in because places were limiting it to 2 year olds and above and they had to be completely potty trained or no dice. No one was taking babies.
I can attest to everything you have written and being in the construction business in the Upper Valley it is a zoo. Material prices gone nuts. Shortage of trade workers everywhere around here. Yet I can’t help but wonder if that has also been caused by the idea that every single kid graduating our local high schools should go to college when we all know many are not cut out for that. Looking at the demographics of the average age of plumbers and electricians in the Upper Valley, there are some folks that are still going to make a damn decent income in the years to come regardless of when this economy cools or even stalls completely. The trades are totally disrespected ( thank you all you” guidance” counselors.
But as some other posters that have said it better, it is a great time to be rich, work from home with a great job and internet connection. If not, it’s a pretty sad state of events.
Upper valley denizen here as well. I live about 15 miles north of Hanover in what was considered hillbilly country when I bought my house years ago. There’s a lot of summer traffic up here due to the nearby lakes and kids summer camps.
In the town to the south, there are two restaurants that are back to full dining options and don’t seem to have any difficulty hiring. A third, which has done a land office business in take out throughout the pandemic has made a few attempts to re-open their dining room and bar, without long term success. They always have a help wanted sign up. So too the general store down the road, which offers starting pay of $10.50 per hour.
I’ve also noted over the years that there is little to no turnover at the local hardware store/lumber yard, or at Farm Way, where you can get everything from chicken feed to living room furniture. So not everyone is having trouble finding and keeping workers.
Two restaurants closed during the pandemic – one has reopened and the other will shortly.
I took a drive over to the plymouth area yesterday to pick up a couple of barrels to collect rain. Gas is usually 20 cents cheaper in that area. It was the same price as it is in Hanover.
Australia has largely been lucky. Most of our residents and most of our have pretty much avoided lockdowns and continued as normal. Nightclubs and restaurants have remained busy. International tourism and education have suffered.
3 weeks ago Melbourne was business as usual. Retail and hospitality was busy. We are now back lockdown to eliminate a leak in quarantine. But it should be gone in a couple weeks.
I was in Melbourne a month ago. Every second cafe had a ‘Help Wanted’ sign in the window. The usual employee pool of backpackers and international students has dried up. Apartment prices in the inner city have dropped significantly, probably due to same.
Here in sunny Queensland, real estate prices are excruciating, thanks to low interest rates and a wave of work-from-homers looking for a more congenial place. About half a million expats came home from overseas, many from places like London and San Francisco with money in their pockets looking to buy. Australia has less than 25 million people – that’s a 2% population increase in less than a year on top of normal growth.
Coastal towns like Hervey Bay have experienced an explosion in people living rough, even with pensions or unemployment, because rentals have gone up so much. The weather’s good enough that no-one freezes, but we used to pride ourselves on not having US-style shantytowns.
I live not far from the Delaware beaches, but not close enough to pay the land premium. Around me, construction is booming, and the asking price for tiny houses on minuscule plots of land is ridiculous, but people are buying them. The last time building was this crazy was right before the crash of 2008 when some building projects sat fallow for 12 or more years.
Traffic in the resort area is INSANE, and has been every weekend since before Easter, regardless of the weather. Part of this is due to Biden being president, so now everyone knows about the beach community. Businesses in the area, especially at the beaches, are struggling to find workers because their J-1 student workers from abroad are not coming, for obvious reasons. Now those businesses are trying to recruit locals that they have actively ignored in the past at crappy wages and whining that they’ll have to pay more. (As an aside, it also seems that those tourists who are coming are more rude than they have ever been and lack both social and driving skills. Sorry if I sound bitter about that, but these people make my life miserable, even though I live miles away.)
To add to the weirdness of this year, my local grocery store has a crypto-coin buying ATM like kiosk in its foyer. It feels like getting stock tips from the shoeshine boy. Inside the grocery store, prices are up and some package sizes are down, but according TPTB, that’s not inflation.
From RV snowbird country in the southwest: people with some savings in the market have prospered and are having a ball. People who ‘never got into investing’ because they were underpaid all their lives, or had to cash in for this or that crisis: are scraping. Can’t travel like they wanted because they got a great deal on a big old rig and now 5 mpg is a serious problem. While site rents and the occasional meal out are rising. Forcing a lot of people into grabbing cheap deals to stay in one spot for 6 months or a year. So much for the ‘let’s see the national parks and the country’ dream they had in retirement. The prosperity at the top is only creating price inflation for them.
Towns you visit are usually either booming exurbs where there is some economic force driving the boom; even if its only retirement home building; half of Orange County seems to be pouring into Pahrump, NV or Fort Mojave, AZ. Gila Bend, which was about to blow away after its base removal years ago, is suddenly starting to come to life and will become a Phoenix exurb, redevelopment is under way. No doubt lots of investments from Phoenicians flush with wall street cash. And some other towns, remote, are crumbling to dust. Either you have the do-re-mi sloshing around or you don’t.
Resource extraction is a big business out west; ‘asset stripping’ has always been a way of life in mining country. Now they are mining everything they can, including the rivers and aquifers; big shots plant thousands of acres of alfalfa for cows raised in deserts, and unneeded and unsustainable nut trees. Where surface water is the only option for irrigation, the Rio Grande and Colorado both run dry or near it. The little people think it’s great, they have jobs running equipment as they all work together to create the next dust bowl.
Things seem to be booming here although many of our big real estate projects are likely speculative investments by far away companies. When I lived in Atlanta it was much the same and indeed this upstate SC area is threatening to turn into Atlanta should it all continue.
For small businesses though it’s likely far less bright. The downtown restaurants complain about their high rents and Covid has of course had an impact. Some large retailers like Stein Mart and Office Depot have closed stores. The big box stores appear to be thriving.
It’s actually getting worse here in Forest Hills, NY regarding closed storefronts on the major shopping streets. Many more closedowns — of drug stores, coffee shops and restaurants. 71st Road/Continental here is starting to look like 8th St in Manhattan, all shuttered and for rent.
Street venders are doing fine, though.
Busses and subways are not enforcing masks and there’s rising violence, so people are avoiding them. I’m still hesitating to have dinner with friends in Manhattan.
My mom passed in February. She owned for 36 years a 1400 sf postwar brick ranch in Jefferson Parish, LA convenient to the New Orleans business district. The house was really beat; it had a 60 Amp electric service with only 6 fused circuits and all outlets were ungrounded. It was the only house in her area the flooded in Katrina because of a low slab. We all thought it would be a tear down, as lots sell for $250K.
Real estate suggested a $228K listing which would have netted $212K (are any RE agents honest?). The best comparable house was 3 doors down, newer and much better condition sold for $267K in January.
Anyway, my brother listed the house himself on a Friday in April at 11:00. A guy called him at noon, by 2:00 he had a deposit in hand. Selling price was $249K, cash as-is. On the day of closing a week later, lumber was in the driveway and cabinets ordered.
All the wiring and plumbing quickly replaced, most sheetrock removed and walls insulated. Salvageable cypress strip flooring removed (not sure if it is resale or refinishing). New HVAC and ducts. Complete landscaping.
Place probably has already been sold. The new For Sale sign was gone in 2 weeks after transfer. Rehabbed comparables in the neighborhood sell for $400K+. So the contractor will probably clear $75-100K. It is soooooo… good to have mom’s house in the rear view mirror with hurricane season just starting. The low slab will cause heartbreak sooner or later (same is true for all of New Orleans metro).
Here in Central New York, it is almost pre COVID BAU. Lots of traffic, stores crowded, some places mandating masks. I’ve been to one restaurant this year, for outdoor dining and it was very busy, menu abbreviated and food so-so. Many smaller specialty stores are shuttered. The city of Syracuse (40% of citizens are below the poverty line) seems like lawless shooting galleries.
But good news on the horizon, Amazon’s 3.8M sf distribution center opens soon and a 120,000 sf delivery center for 700 smiley face Prime truck opens soon. The 1.2M sf Destiny USA mall is getting set to default on $700M of bonds and is half empty. 2 other big malls are vacant. Amazon and malls pay little, if any property taxes.
It is crazy…
I’m really sorry about your mother. But in a way, it’s good too that the house has been rehabbed and will have a second life after her. Hopefully a family will find it a good place to live.
But also good that it’s off your hands!
“The city of Syracuse (40% of citizens are below the poverty line) seems like lawless shooting galleries. ”
“The 1.2M sf Destiny USA mall is getting set to default on $700M of bonds and is half empty. 2 other big malls are vacant. Amazon and malls pay little, if any property taxes.”
No relation. They have nothing to do with each other said all of the media and politicians who are doing just fine with their million dollar homes on Skaneatles Lake.
https://www.syracuse.com/realestate/2021/06/syracuse-areas-ritziest-mansion-jumps-in-value-by-nearly-10-million.html
The City gave the guy who owns that place whatever he wanted here-
https://www.syracuse.com/business/2020/09/jma-wireless-planned-5g-factory-wants-to-spread-across-streets-on-syracuses-south-side.html
You want another few blocks? We’ll give you a PILOT! Just let us buy your green bonds!
San juan islands….the rich are way richer.
The Air bnbs coming back, nowhere for normal people (employees) to live.
Complaints on the ferry ride that some fave restaurant isn’t open, no employees,
with the assumption it’s laziness, but IMO it was not working before pandemic and now way worse,
(see above re rich/richer)
One of the houses I work on has a new neighbor who seems to think he can buy the next door house, but I see the problem there being it’s like the 7th house of someone else and they don’t need the money, and would just have to find somewhere else to park several hundred grand, and no longer have a vacation spot…but hey, you never know…
My friends who have kept their houses in seattle through the GFC to now think this is the best the world has ever been (all paper millionaires, paid of all student loans and credit cards with cash out refis to 15 yr for those with mortgages, skyrocketing everything for those without),look at bezos after all, he must have crossed 200 bill by now, while I think it’s teetering on the brink for the same reason, and if there is a crash they certainly won’t blame themselves but the lazy workers. We’ll see…I’ll add that IMO the people vaxxed are well to do and ready to get to spending their fat bank accounts, so numbers look good….but 4x8x 1/2″ CDX on lopez is $100 (lumber prices are getting gouged and I suspect private equity…) Only rich people buy plywood for $100 a sheet.
Notice good many help wanted signs here $12 and up.
Used car / pick up market is quite high however when compared with new vehicles @ $35000 plus there is a good market
Traffic volume on the interstate seems to have grown.
And weirdly the pawn shops are out of inventory (including guns). Some blame it on the stimulus money.
A few more homeless folks.
Here in the US Navy town of Ridgecrest (eastern Sierras, Kern County) business seems to be fairly decent. A few restaurants and specialty stores closed permanently last year, but outdoor dining has taken off (even during the heat wave we are experiencing this week).
Housing is booming due to the base going into serious rebuild mode due to the 7.2 earthquake here a couple of years ago, even to include temporary housing put up for construction workers. Because of the earthquake, remote work infrastructure build-out accelerated so the area was relatively well prepared for COVID.
On the bleak side, gas prices are going back up, $2.50/regular last year is now $3.90 or higher. Both housing purchase and rentals are up at least 10%, and the entire state is facing serious drought. As for that, this area is rated D1 drought level, D4 being the worst (over 33% of the state) and 0% snow pack in the Sierras this year. The State is in trouble.
Homelessness is barely noticeable compared to L.A. I was down there a couple of weeks ago visiting a friend for the weekend and it has skyrocketed there compared to 1.5 years ago. I see very few, and rarely, “will work for food” signs locally.
Food prices in the few grocery stores here are definitely up and as noted by a commenter above, packaging is noticeably shrinking. Home Depot and the rest have jacked up lumber prices a lot. A recent porch repair I had done a couple weeks ago cost me as much in material as it did in labor.
Over all, considering the circumstances, the nasty earthquake we experienced a couple of years ago actually helped the area in prep for COVID. At least 1/2 the employees on the base (probably close to 1/3 of the town population) have been able to continue to work from home and are just returning to the base full time around now (masks still required). Although I am happy to say I still work more than 1/2 my time from home. Yippee! Of course there is a slight negative side to that… I should have retired at least a year ago, but with the lockdowns there wasn’t much point since I really couldn’t go back home to Upstate NY and enjoy my new found free time.
So bottom line, at least financially, this area is doing OK despite the rising costs of basics. There is plenty of well-paid work available to afford much of the cost of living here… if you can stand the heat.
Ridgecrest gets to avail federal stimulus funds annually. Like Fallon, NV, (or Lompoc, CA) federal money from a military complex sets a steady base for the local economy.
Retail: I live in Manhattan’s East Side, NYC and the impression here is of a poor economy. Three major outlets I used to go to have closed, including Barnes & Noble, Bed Bath & Beyond, and Petco. Plenty of empty storefronts. So many of the small pet stores are closed that it has become a major chore to pick up pet food in person. I have to hike over a mile to get to a store now and hike home carrying the purchase. (For those living in other areas of the USA, most of us in NYC do not get around using cars, but rather on foot and mass transit; therefore, carrying purchases over longer distance is a real pain in the back/arms. OK so there’s Chewy.com; I am the curmudgeon who doesn’t like to order in bulk.)
Restaurants: they have opened but I don’t see volume in business sufficient to be an economic boost to the economy. And personally, the curmudgeon finds eating out is too costly.
Hotels: Well, at one time during the pandemic, NYC was housing covid positive and homeless people there for the isolation. That program is now ramped down/gone.
Real estate: the apartments surrounding mine are largely uninhabited. I was hoping to sell mine in another 1-2 years but am now concerned about that prospect. My impression is that the flux of professional and middle class persons has been out of the city. My neighbors may be skewed more toward retired or older persons now.
Crime: it is up, but not so bad as 1970’s / 1980’s crime. It’s worse in public housing developments because the security is non-existant there. However, in my hood it has been fine coming and going.
Food insecurity: we’ve been monitoring that at work and it was rising steadily during the pandemic until about March 2021 when it suddenly began to dip, particularly for taxpaying families with children. But in some neighborhoods it continues to worsen and it was really very alarming in late 2020.
Office work boosterism: NYC is requiring all city workers to come back into the office even when it makes no sense. Heck, they are giving out laptops to come back into work, which makes no sense to me, except as a means for showing private companies that they should ALSO call their workers back. Yes, it is my belief that NYC is using city workers and laptops to demonstrate to private companies that it is safe again to occupy NYC office space. And maybe that’s not so foolish considering the amount of NYC economics that is tied up in office real estate. It’s just that nobody likes being the guinea pig for capturing the boa constrictor.
Now, I also have a dinky little property in a lovely, bucolic section of western NJ. And it has had no price appreciation in about 20 years. To me it looks like a rustic cabin on the edge of park land (b/c it’s next to preserved land). In the past 12 months, nearly every other week some RE agent or another calls to ask whether I’d consider selling it — my little rustic cabin. It got me excited enough to replace the rusty furnace this spring (but not to sell).
Southcentral Tennessee here, in the heart of Amish country. Manufacturing base mostly gone and so it is generally an agricultural economy, with big fields of commercial soybeans and corn. As has been noted in most comments, prices in the grocery stores are rising, there are plenty of help wanted signs for workers in fast food places. Construction, even with the sky high prices for lumber and other supplies, is booming and contractors are hard to pin down. I understand this is because there has been an influx of retirees/ escapees from other parts of the country due to lower local costs generally and no state income taxes. Still, some items are just not available or delayed in delivery–like new windows on back order for three or more months. One neighborhood home recently sold at asking price shortly after being put on market. The neighbor is moving to the far eastern corner of Tennessee and advises that the housing market there is crazy–homes going for 10 to 30,000 above asking price and being sold within 24 hours. I just recently replaced a washer and dryer and the local appliance store had only one item of each. Manufacturer’s website showed most washers and dryers out of stock. These are front loading machines and I have had them installed dryer on top for the last ones. This time the installation kit, less than $100, wasn’t available and might not even be delivered on the projected date the end of July. They sit side by side in the laundry room now.
Quick comment here to the effect that I do not see any mention of the cost of living index ramping up yet. That item matters to all us Social Security reliant geezers.
Any boffins out there know the time delay for COLA increases in the Social Security pay rate? (I know it’s an assignment, but, this is probably the best generally accessible forum with the brains trust to ask.)
I am wondering if long covid may also be playing a role in worker shortage – recently saw something like around 30% of people who get the disease suffer long haul effects. Those essential workers would be the hardest hit.
Advertising: seems to be booming. But businesses also have a lot to advertise whether it’s new deals to attract back customers or other things to make cutomers aware of changes or initiatives with all the social changes.
I’ve been wondering for awhile now if there was an advertising bubble – with advertising being the way to revenue for a lot of “tech” companies.
We’re starting to see a bunch of people on the street who really aren’t used to it, and we’re starting to see people with some real physical problems that would normally keep them in retirement/on disability having to work. It’s going to be a brutal summer in the desert.
I think people also forgot how to socialize and hold their liquor in public so I’m expecting lots more anger, and I’ve seen lots of fights in places I wouldn’t have expected in a tourist town.
House prices are nuts, just like almost everywhere else, and I suspect that the RE agents aren’t letting most houses in ok shape at an ok price even come to the market. Looked around briefly out of curiosity, and the houses that I saw were in dire need of work and >$100k overpriced. When the RE agent saw the house I’m in (which is in good shape), he called back the next day saying he had a buyer out of California that would cut a check right there if I was interested in selling.
This K-shaped recovery is going to be no joke.
“This K-shaped recovery is going to be no joke.”
And after the next major economic crash it’s going to be worse. After each crash or economic shenangigans fewer and fewer people recover.
And they happen about every 10 years, but who knows what that pace will pick up to.
Can’t even be sure we’ve seen the real crash from the latest troubles.
A friend of mine currently in California works for a company that installs high-tech solar energy projects. She says experienced people are leaving. Not sure where they’re going, if anywhere — some people may have figured out how to live cheap back home. She’s also going to quit, but expects to find work somewhere around NYC. Real estate in NYC is insane, but that’s not new. Another friend in Florida sold a house (legacy) for about twice what was expected within 48 hours of listing. 11 offers at asking price or better the first day. As above, good to see it in the rear-view mirror as hurricane season approaches. Here in NYC, many small stores out of business, grandiose real estate schemes seem to be on hold for the moment, but a lot of stuff was built in the last few years so maybe the law of diminishing returns is setting in. Auto and truck traffic is not back to pre-plague levels, but there is much riding of bicycles, especially electrified ones, plus skateboards, scooters, and what look like flying saucers. Riders are mostly kids, do not appear tremendously well off. I work once a week at a free food distribution project, and lines are longer than ever.
On our way to go camping, I saw gas for $4.39/gallon for regular this last weekend at gas stations along I-5. It WAS cheaper in Bakersfield at $3.99/gallon.
Here in Silicon Valley in the Palo Alto area the traffic is terrible again; the roads are jammed. A lot of new housing is under construction, so the traffic is going to get far worse when they are occupied (but yes, we need housing). The big vet hospital we have brought our dogs to for 25 years has stopped taking new clients – even for emergencies – because they cannot hire enough staff; that is shocking. There are help wanted signs everywhere, but there are also many buildings for lease. There are not so many homeless people visible but that may be because it is hard to see anything now from one’s car due to the traffic.
The cheapest gas is $4.49 per gallon, but the gas stations have long lines of eager customers.
In my Midwestern urban area:
There’s more panhandling than I’ve ever seen – some corners are never without someone with a sign. Still a lot of signs of heroin addiction when one frequently sees the half starved homeless youths with signs (white, I haven’t seen minorities in this area). A fairly frequent occurrence is to hear about someone’s 20 something year old child dead due to overdose (and it’s no reflection on how well they did as a parent because I know a lot of these people and that wasn’t the problem).
I don’t see any change in the future with the politicians unless we can get some election reform, but I’m not holding my breath. Seems to me that a lack of real term limits and career politicians keeps things the same for everyone and that is the way the powers that be like it.
Don’t even get me started on corruption. The famous for smoke filled rooms all had to move someplace and one of those someplaces is my town. Most people don’t see it.
The big divide between rich and poor can be easily seen here. Two cities within one.
We have a problem in some parts of town getting a baby to live to the age of one, a sad state of affairs.
There’s also a human sex trafficking issue in my metropolitan area but that doesn’t make the local news much. As usual it’s the already economically marginalized that are most at risk for being the victims in that world.
Lot’s of apartment building all over town all owned by the same few folks, all the familiar big names around this area. They are being built as fast as they can be and I don’t think there’s too much worry about how many units are currently empty.
More positively – I believe the Black Lives Matter movement has made some impact. There is still more to be done to stomp out systemic racism but those BLM peaceful protests meant something (even when they weren’t so peaceful due to the hiring of those who were paid to break windows and cause trouble- but there was an obviousness to all that which most quickly saw through).
It’s a shame it’s taken a pandemic to get some of these BLM changes going but nonetheless I’m glad to see it. It’s like a conversation that has been needing to take place has finally started. I give a lot of credit to those who participated. That was real bravery to be part of those marches and I’m hopeful we are seeing changes as a result.
Also want to say some good things about the young people (a lot of them Bernie Sanders supporters) College students and those who of typical college age seem to have a sense of what is really going on, so that is also a positive for the potential future of change for the better. They were a presence at the BLM peaceful protest marches also (as far as I could tell). Affecting change in their young adulthood, a good sign.
With housing, no young people can afford what used to be affordable but there are still a couple of pockets they can buy in near here. It’s just that I wonder when those up-and-coming areas are going to also be unaffordable. There is a lot of house flipping in my area but that is a hobby for dual incomes and the already well off.
Underpaid and overworked is still the norm for those without an advanced degree here so classism is strong as ever. Also it’s become easier to see the class divides when driving through various neighborhoods or even outside the city in rural areas. There is still just not enough opportunity, those factory jobs are long gone and there just aren’t other ways to live with only one low paying job. Everything written in Nickel and Dimed still holds true around here and that book is over 20 years old.
If those in power ever fully get rid of the unions, which is what many of the powers that be have been working toward for years, I doubt there will even be a middle class left in this area. For now we still have a middle class. Without unions this place would already look like those states that only have: 1. tourists 2. the poor 3. the wealthy.
Thanks for the question. I hope I’ve given a helpful answer.
In Hawaii single family home on Oahu median price now $1M. We are tops in US for unemployed. Gov has imposed a requirement now for a few weeks for those on unemployment to actively seek work. Anecdotes in the paper tell of people not showing up for interviews, taking a job and immediately quitting, etc.
Tourism is way down, most are coming from the west coast where they expect to have heavy mask enforcement. That helps out Maui, not so much Oahu which is much more dependent on Japan and other East Asian arrivals. We own a hotel room unit in Waikiki. Don’t have May results but 3 of 4 months in 2021 have been zero revenue months. Have been told rental car places wanting $400 and up per day. They got rid of their cars last year and can’t get any now due to no chips. We do have a significant military economy and that has kept things from falling further. Our leg session ended a couple weeks ago and now they are saying they predict a $600M surplus over the FY 22 budget (hasn’t been enacted by gov yet).
Of course on Oahu we have our promised $5B transit project now estimated at $12.3B and hoping somehow Biden will bail it out. (But Sen Hirono is no Inouye.)
Airlift from US mainland seems to be pretty much back to pre-covid, with SouthWest expanding seats. Don’t know what the load factor is, but pricing seems reasonable.
Here in the PNW, I visited the local Ford dealer for my free six month service on a new F-150 pickup. They had only two new F-150s on the lot, and the lot was only about one third full. Prices have gone up. Only saw a couple other customers. This dealer normally has forty to fifty new trucks on the lot.
We have been avoiding any home projects requiring lumber or plywood.
The local library is open again. Yeah!
Before covid we were a dual career couple with three kids (two of whom were in public school). When covid started I had to quit my job to take care of our kids. It’s been 15 months and they’re still at home, hopefully they’ll be in school this fall. The loss of my income has been a big hit. It’s not so bad that we can’t make our mortgage and student loan payments, but our savings is steadily depleting and the credit card balances are creeping up. We have reduced our lifestyle, and will probably have to make additional, maybe significant, reductions to our lifestyle. Before covid we were the quintessential upper middle class consumer millennial household – Amazon, stitch fix, regular dining out, vacations etc. Now it’s mostly just pizza if we dine out, we limit our non essential spending, we make our own bread, grow as much produce as we can, raise chickens for our own eggs etc. I’m trying to get our economic footprint down as much as I can so that maybe, just maybe, one day my wife will be able to retire. As for me, before covid I was in a unique spot employment wise and I think 18 months out of work is going to make it hard to crack back into it. With my wife’s salary driving up the tax rates, and the cost of childcare for our youngest, I don’t think there’s a job out there that makes financial sense even if my two oldest can go back to school.
As for our region, the economy is coming back to life, but a huge problem is that our service economy relies on labor that can no longer afford to live here. Our economy serves only boomers who do not work, or absentee homeowners who only weekend in Sonoma county. The cost of living here will slowly strangle the local economy IMO.
And here is one huge component to the labor shortages – why the f*ck would I want to go back into the awful, oppressive American workplace after what has just been done to our families. To heck with the people who run this country, and the small business tyrants and mid level managers who are their shocktroops. Whatever happens, our financial and economic situation is vastly different to what it was before pandemic. Personally, I’m a changed man, and I’d rather scratch subsistence out of the soil than go back to spreadsheets.
Jersey Shore anecdote report:
Potential server: I want $150 per shift plus I keep all tips.
Restaurant manager: these kids want to wear their masks while they work. They’re brainwashed. They’ve been fed a bunch of crap.
Starbucks in high end mall: everyone wearing masks
Local diner: No one wearing masks
Survey of small retail establishments: How much federal aid did you get? Answer: crickets
one should only have to share tips with bussers and cooks….hopefully that’s what you mean…I don’t tip the boss, I pay the list price for that individual…
I live in Southern New Hampshire in what could be described as an outer suburb of Boston. To put it in one word, I’d describe the economy here as “screwy.”
Real Estate and housing has gone completely bonkers. If you lose your home for any reason and you don’t have a half-million in the bank, you’re probably going to have to leave the area. Rentals are scarce and priced through the roof, and people are getting slammed with massive increases the instant their lease expires. Houses are routinely selling for $50k over the appraised price, as-is and in some cases sight unseen.
Gasoline is $3/gallon. Food prices are 50% higher than 2 years ago. Inflation in general is rampant, if the merchandise is available at all.
Help Wanted signs are everywhere, and wages are climbing, but not as fast as prices.
I’m personally doing fine….my job translated well to WFH, and although I got laid off last year, I quickly found another job.
Boston is mixed. During the height of the epidemic, it was spooky: There were no cars on the road and virtually no pedestrian traffic in Boston or Cambridge. I managed to drive home at 4pm without having to slow down to the speed limit once.
Today, traffic has increased a lot, but is still significantly below pre-epidemic levels. Pedestrian traffic in the South Station area is still very light, and the restaurants are hurting. I walked by one spot at lunchtime that pre-epidemic would have had a line of customers out the door and saw nobody but staff in there. They do not have a bright future: My employer has not reopened the office, and doesn’t even have any firm plans on when it might happen. They’ve sub-leased half of their pre-epidemic space and admitted that a significant portion of the employees will remain WFH permanently. I’m one of those, although to be fair I was WFH before the epidemic.
Overall, I’d say the bottom half of the economy here is hurting: Between losing their jobs during the epidemic, and insane inflation they’re not managing to keep their heads above water.
The upper 50%, the ones who own their home, can WFH and were making a decent living before the epidemic are doing pretty good.
I’m waiting for the other shoe to drop when the people who aren’t making it decide that it’s time to go down to city hall and start burning things down. If 20,000 people show up intent on arson, all the local police are going to be able to do is stand back and let them do it.
Sequoia NP might set a record for annual visitation in 2021, all without the benefit of any foreign visitors. (when on chance you do hear French or German et al being spoken, its usually ex-pats living in LA or SF)
Some of it is on account of Yosemite NP being on a strict reservation basis now as far as entrance into the NP, whereas anything goes here, we’re getting their castoffs.
Tiny town (45 sq miles) has been flat out busy, the brewery a jamb job of humanity near the river on the gravel garden. and eateries around these parts all raking in the Benjamins. Sometimes I drive by what looks like desperate attempts to park somewhere-anywhere, that busy.
AirBnB et all is largely completely booked up for the next 3-4 months, and all that will do is turn more homes into short term rentals, because profits!
One thing seldom talked about in real estate is the dreck that is usually unsaleable @ almost any price and just haunts the listings like perennial 4 day old fish in the fridge. Even some of that is finally selling, the tendrils of cash coming via the SoCal exodus mostly, poor little equity refugees.
Housing went gangbusters up in value just after 9/11 as there was a cocooning effect, and I think we’re seeing the same thing here in the entire country cocooning, everybody playing along.
My buddy runs the sightseeing tour in the NP and as they are only doing private tours now, he needed a smaller van than his fleet of 15 passenger versions (when will he be able to get what are often complete strangers again by the dozen together for a 5 hour tour-a 5 hour tour?) so he had been looking desperately for a newish Ford Transit XLT 150 8 passenger van, and finally found a 2019 in La Mesa that was probably too much money, but it didn’t matter much, as there were simply so little inventory out there in supply versus demand land.
Here in NE PA, one year ago we had 3600 homes for sale, now there are about 400 for sale, they have all sold. My own community, had 37 homes for sale, now there are 2. For the first time in 35 years, I didn’t have anyone calling asking if I needed any help for the summer. Not one, but managed to get 3 guys on board at $15/hr, 45 hour week. Plus my 21 yo son, who had worked for me for 10 years and is better than the 25 -40 yo guys ive had in the past.
Gas price is $3.29/gallon today for regular. Food prices have increased exponentially while the container sizes have shrunken. Most people can’t do the mental math and realise the cost per unit. We have cut back substantially on red meat purchases.
The increase in lumber prices is due to private equity firms and hedge funds no doubt. I don’t believe that the guys who log the trees, haul them to the mills, or the guys who walk the logs thru the entire logs to lumber process have had their wages tripled in the last year. Its the people with manicured fingernails pushing buttons on a computer and golfing at the local club who are responsible for the draconian spike in prices. Makes me want to buy a portable WoodMizer sawmill, order a couple trailer loads of Hemlock a
I once had the pleasure of hearing a recording of a musician from the
Alaskan outback who had learned to play the hammered dulcimer with
the hammers replaced by tiny bows. It must have taken him hundreds of
hours of work, and the results were….interesting. You have to respect the
discipline and creative drive (and the long winters) that made him do it.
I am myself a violinist, and I have to say the long days,weeks, and months
of the pandemic indoors gave me the opportunity to practice my music
without the let’s-go-have-a-beer social relationships of normal times.
Most of the people responding to this thread are keen observers of the
minutiae of daily life- the price of things, the restaurants that shut down,
the shortages of various commodities, etc. This is superb stuff.
I am old, and sometimes I begin to hear Andrew Marvell’s winged chariot
in the distance. You may call me, like Oscar Wilde, “A pencil sketch of a
Great Man,” although in my private moments, I think it’s closer to a
child’s crayon drawing, with a smiling stick figure in red and magenta.
Musicians have a hard life to bring their work before the public.
The “Road Life” means that almost weekly we read about someone whose
song was vivid in our imagination dying in their late 60’s or early ’70’s.
burned out and done in. Yet music is a vital alternative to the MSM
where tiny heads spout big opinions 24/7. The same opinions, over and over. THEY never lacked for a presence during the pandemic.
Musicians? SOL (the last word is Luck.) “Intelligences, vast and cool”
seemingly escaped from a bad HP Lovecraft novel now control via AI
the soundtrack of our lives. Live venues and festivals are now distant
memories, at best. No one goes out dancing on a Saturday night, or any
night.
‘
About 45 minutes west of Toronto here in the Golden Horseshoe. Stay-at-home order just ended and phase 1 of reopening won’t begin until June 14, so no way of knowing yet which restaurants and storefronts have survived. Real Estate market is very hot — too hot.
Women have been disproportionately affected by the K-shaped recession and recovery.
3 hours north of San Francisco in Northern California. Businesses in the county are wineries, tourism, organic farms, house repair, real estate, and retirees living on social security.
– Neighbor tried to hire an appraiser for his house. They are booked up for at least two months. He says that they have 100 appraisals waiting.
– Local architect tells me that house prices are crazy. People from SF Bay area are land and houses in our area buying ‘sight unseen’, and driving prices up.
– According to Zillow many local house values have jumped abruptly.
– Local contractor tells me that a sheet of plywood is $100. He’s never seen anything like it.
– Hiring a local contractor was nearly impossible 2-3 months ago. One guy claimed to be booked a year in advance. I sense an abrupt change in the last couple weeks. People are suddenly looking for work.
– I bought some 2×4’s and sheetrock recently, and the 2×4’s were absolute junk. Splits, knotholes, warped. Guy in the yard who wrote up my ticket was embarrassed to sell them.
– Local banker says applications for Home Equity Loans are skyrocketing. They have many stalled for lack of appraisals.
– Local highway which leads to nearby bigger cities is becoming jammed with long lines of traffic. Looks like mostly commuters with a healthy mixture of delivery trucks, and contractors. In the past, the local highway traffic density has been a good indicator of the economy. More traffic = better economy.
– We still have a high number of damaged-looking people on street corners as panhandlers and beggars.
– Help wanted signs everywhere.
– Banker tells me that they are flooded with Home Equity Line Of Credit apps. Banks apparently divided on this… Banker tells me some are aggressively seeking, others aggressively rejecting HELOC.
– Local (maskless) coffee shop starting to do a good business of coffee’s, salads, breakfasts.
– New Starbucks coffee shop just going in about three miles away from our existing local coffee shop. Construction is moving fast. The ground has been broken and the lot is covered with construction equipment.
Middlefield Ohio, the big town in a half Amish half Yankee rural area between Cleveland and Youngstown, has “help wanted” signs in every establishment; i see dozens on every shopping trip, as well as several billboards along the 3 mile stretch of Route 87 that constitutes the commercial district, advertising for start-up bonuses for those who’d work for local establishments (small factories, woodworking and the like)…
i blog about the economic reports. ie at Angry Bear and Econintersect, but what’s been going on around here since last summer flies in the face of all the data i’ve been seeing…