I am sure Naked Capitalism readers can clear up what a Bloomberg headline screams is an “American Mystery Story,” that the economy is creating more jobs, yet retail sales have fallen three months in a row, with the latest being a 0.6% decline in February versus an expected increase of 0.2%. The analysts quoted on Bloomberg blamed the terrible February weather and were confident consumer spending would pick up soon.
Of course this article could simply be Dr. Pangloss meets the job market. It somehow appears to elude most commentators that the economy is creating more jawbs than jobs, and that the labor participation rate actually fell from 62.9% to 62.8%. But analysts somehow manage to look past that. From the Bloomberg story:
“The expenditures that add up to gross domestic product are coming in a lot softer than employment,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. “Why would retailers be hiring if sales are falling? Why would they be boosting hours if sales are falling and why would they be paying more?”
The other factor leading to lower spending is that the saving rate is up. Well, why shouldn’t the savings rate rise on a secular basis as the public realizes (if they haven’t already) that social safety nets, and most important of all, Medicare and Social Security, are being hollowed out?
I’m thus mystified by the uniform tone of boosterism in the media about the state of the economy. In New York, where many finance reporters live, things aren’t all that rosy, so it’s hard to attribute it to being biased by local readings. I’ve never seen more vacant stores than now, for instance. Even though that is driven by overly-aggresive rent increases (no joke, rents are being doubled in my ‘hood on Madison and Third Avenues), it still destroys good business and jobs (I’ve kept tabs when I can, and hardly any of the stores that are leaving due to rent increases are relocating). Similarly, salons, an indicator of discretionary spending, are hurting. The man who cuts my hair, who used to run a very successful salon, says he’s had multiple offers from salon owners begging him to take up the balance of their lease.
Admittedly this sighting is from December, but another local noted how things simply aren’t robust here. And remember, this is when reality started diverging from analyst expectations:
I don’t know what exactly is going on out there, but I’m seeing all the same stuff I saw in early 2008 ….the ease in getting high-end beauty appointments, sales in high-end stores when they shouldn’t be taking place, more theatre on TDF online and, of course, the plague of store closings (we had one seized by the marshals the other day). My building management sent out a second notice today reminding people to contribute to the annual fund for the building staff (the one’s that don’t get as many tips) something I’ve never seen them do before. I see very few people walking around Manhattan with shopping bags, and my building seems to have had a fall-off in Fed Ex and UPS packages in the past few days. I also wonder if the healthcare stuff plays into it — forcing people to deal with insurance right around the holidays seems to be yet another Obama fuck up.
Now having said that, I’m told that conditions are better in smaller cities like Baltimore (but that may be due to proximity to Washington, which has done the best in this “recovery”) and Boston.
Do readers care to clear up Bloomberg’s little “mystery”? There are clearly parts of the US that are stronger than others, and it would help to get more calibration of what local conditions are like.
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We have been seeing more price cuts in housing recently. It feels as if people are beginning to realize that there is no ‘robust’ market for existing home sales, and are responding with cuts in the asking prices to try and get some action going. New housing starts, at least down here, are miserably ‘soft.’
Thank you for mentioning housing price cuts. As someone who moved from New York to the Baltimore area about a year ago, I can attest to what Yves is saying. Even then I thought things in New York were feeling a lot like early 2008. That same hollow feeling where stores kept having sales while the media kept swearing everything is great. If everything is so great, then why are you having sales? In the area (suburbs) I’m in now, right now there is a huge sign on a street a couple of blocks away for a new housing development that says: “Blowout sale”. I’ve never seen such a thing in my life. Who the hell has a “blowout sale” for houses? It’s been there for a few months now. It wasn’t put up until several months after the houses were built. Again, I ask, if things are so amazing and “booming” then why the hell is there a “blowout sale” being advertised for housing in a Baltimore/Washington suburb?
The phenomenon of “continuous sales” has caught our eyes too. What were once ‘holiday sale’ flyers stuffed in the local papers have become a regular occurrence. From purely local experience, I would say that JCPenneys, Kohls, Belk, and a slew of even more ‘specialized’ clothiers and dry goods emporia are very close to rounds of store closings and “downsizings.” Our e-mail inboxes suggest that Sears, Best Buy, and other enterprises are under pressure. The “offers” are becoming increasingly desperate sounding. “You have 2347 points to spend! Come on in and see our great bargains!” This “rebound” is looking like the body is just bouncing off of the floor, soon to become quiescent.
Ah! That wonderful fin-world phrase “Dead Cat Bounce”. Probably Wall Street’s sole contribution to humanity’s cultural inheiritance.
Perhaps it’s because people don’t get a warm and fuzzy feeling about the stability of these new jobs.
I’ve gotten hired in the last few years to help straighten out some mess or get a project completed on a tight deadline (I’m an engineer) only to get let go (with lots of others) when the project is over.
I don’t see how this is a mystery at all.
It’s obvious by now that this is a demographic issue. The big spending Boomers are in the end game with no money and tons of debt. We’ve watched this happen in Japan, and it’s also happening in Europe. It’s not as though the younger element following them are flush with great jobs and not saddled with enormous education debt, either. It’s absurd to hear of the possibility of rate hikes at a time like this.
The actions and inactions of W, Obama and the InJustice Department, the revolving door of crony capitalism – guess what, even the average schlub gets it. It boils down to no faith in the leadership, in the law and in the US financial system.
OK, I am seeing more job openings: low pay, dead end, hard labor jobs. Often very short term: banquet servers, loading dock monkeys, demolition and cleanup.
Sure their spending. Bad bad, article by Bloomberg. The “Real” is outpacing the “Nominal”. Real Retail Sales surged the first 2 months this year. Real PCE spending was about 5% in the 4th quarter and continued to rise into January. February looks like winter driven temp blimp(notice the surge in online sales, quite telling lol. Let the delivery boy do it)) and things have picked back up in March. I can definitely see it in my city.
Put it this way, lets say oil prices had never risen past 60 dollars a barrel after 2010. How would that effected nominal spending? It would have reduced it, but the “real” spending would have increased at a faster clip. In otherwords, If oil prices stay steady through the 3rd quarter. 4% y/y spending real pce it will probably be. Strong stuff. As I have said on this blog………first you need the boom before the bust.
Local conditions in Berkeley seem generally ok on the surface, with some clear negative indicators. Our annual police report just came out this week, and violent crime is down 25%, and overall crime was down to a lesser degree. This was after a significant uptick in 2012. Housing prices continue to go berserk here; many houses are still closing well above asking price (I’ve seen $2-3M houses going for $400-600k above asking. Ridiculous). Average days on the market are decreasing, and number of properties on the market are increasing over the past 60 days. Although some of this is clearly seasonal, I think the home sale prices are driven up by all the buyers from China–which doesn’t come as a surprise of course. Average folk are completely priced out of the market. We went to an open house this weekend for a 2,100 sq ft house ($1.8M) and observed that all the other potential buyers were much older–50s, 60s. That seemed unusual–no young families looking to buy (of course they can’t afford to buy a $1.8M house though). Our rental market is VERY tight as well and many people are having trouble finding affordable homes; I see posts on our neighborhood list serves about this all the time. On the retail side, there have been some restaurant and local book store closures, and there are still a number of vacant commercial properties in the heart of downtown by the train that have been vacant for at least two years. I don’t have a gauge on how unusual that is though.
In the SW suburbs of Minneapolis retail seems to be continuing as it ever does there, busy and pricey. The mini mall near where I work is doing major remodeling and has been attracting new, national tenants. Many of the houses in the older, well maintained residential area where I take my lunch time walks still have loads of contractors’ trucks parked in their driveways.
Life where I live is a different story. On there are storefronts in my neighborhood (East Side St Paul) that have been empty since I moved here four years ago. Foreclosures get demolished and “pocket parks” get built in their place. Other parts of St Paul seem to doing better. Appts at a hipstery salon on W 7th I called were 2 weeks out, Grand Ave is still going strong, the Barnes and Noble that is leaving Highland Park is being quickly replaced by a Target Express, much to the dismay of those worried about traffic (no news yet on what the use plan for the land where the Ford plant will be – although there’s way more community interest in the fate of that space than I have seen for the empty, empty land on Arcade Ave on which 3M used to reside), tear downs have become controversial in the Summit area, etc.
My sense is that if you could afford it in this town before, you can again. If you couldn’t though, you are completely SOL now.
Agreed, Stephanie. I’m living in the north suburbs of the Twin Cities (Shoreview, North Oaks) and they’re building McMansions and high-end townhomes wherever there’s a plot of swampland to be bought. People seem to still take their vacations and I see plenty of new SUVs. Restaurants are almost impossible to get into on the weekends. But this is the upper middle class. For someone like me, who’s working class, it is impossible to find decent housing (by that I mean something with heat and without numerous critters crawling around) for under $1,200 a month. Frankly housing in the Twin Cities has been unaffordable for decades on a middle-class salary and now is completely out of reach unless you’re making $25 an hour or have a two-earner household. As for jobs, I’m in the legal field and I haven’t seen very many job openings at all since the 2008 recession. Most people in legal will move around quite a bit, but not anymore–we worker bees are hanging on for dear life and people are just not leaving their jobs if they’re employed full-time. So while the upper class is doing just fine, thank you very much, for the rest of the 90% of us, we are slowly getting poorer and poorer while rents increase, housing is almost back up to bubble levels, health insurance is out of sight, good jobs are scarce and wages have barely budged in at least 15 years. This is what I see, anyhow. And forget about retirement, which was a pipe dream for people like me to begin with.
I live in uptown Minneapolis and at least restaurant-and-retail-wise things are cooling a bit (and all the new fancy apartments are done being built). And theres this http://www.bizjournals.com/twincities/blog/real_estate/2014/12/code42-wont-anchor-mozaic-uptown-office-complex.html?page=all. Code42 has made a big splash tech-wise (in 2011 the were 30-some employees now they are over 600). So it’s interesting to seem them cool on something (unless it’s there new Amazon CFO). St. Louis Park building (just west of Minneapolis) has also cooled on it’s apartment building (which had larger buildings than uptown Minneapolis (uptown has some sort of 6 story height limit).
That said, over the Summer SW Minneapolis had a moratorium on building because of so many teardown-rebuilds.
I have friends that bought a house in Shoreview in 2011 for like $100K (built in the 50’s). If rent is that high, then all the foreclosures/short-sales must be used up? With the way funding goes I think most new building has either been McMansions or multi-tenant. Although I can’t imagine there is much multi-tenant building in Shoreview.
Also, interesting to me, my friends in the East Village in NYC (really nice area by Tompkins Square) noting even bars closing. And they are looking at moving out to SF because the NYC tech job market is severely limited (the startup sector in NYC is a fairly small close-knit group). Apparently SF is still booming.
Also SW suburbs, my REIT landlord decided to raise my rent by $400. After a short guffaw started looking for a 2 BR rental. Everything’s going for $1200-1500, much higher than 18 months ago. Decided to look for 1 BR, but there’s barely any price difference for half the square footage. 1 BR listings for $1100. Admittedly it’s a little early in the season but how in the world can people afford these rents? 2 BRs are supposed to have a price premium because it’s easier to get a roommate. Are people just shacking up in the living room? Buying doesn’t look all that affordable either. At these prices I’d be proud to move into my parents’ basement — as a sign of plain good sense.
Now let me get into the REIT landlord and how crapified their systems are. They cut a deal with the local cable monopoly so all residents are now mandatory customers of Comcast. I’m sure they’re getting a nice kickback. They added a $40 “maintenance fee” for upkeep on common areas which is forbidden by state law and therefore almost certainly illegal. They cut another deal with an online renter’s insurance sweatshop and force place their terrible insurance unless you re-verify your own insurance with them twice a year. In the past two months the building has experienced repeated acts of vandalism including racial epithets inside the building, plus issues with theft (bicycle stolen from underground garage). These are not things you usually experience in white bread Minnetonka. Then the automated notice I received yesterday advised me of a $400 rent increase, the result of a crapified calculation that didn’t take into account my month-to-month lease (I am already paying a premium, their calculation assumed I’m on some sort of lease). Every aspect of my interaction with this company is fraught with gotchas and time-consuming (for me) snafus. As I prepare to move, believe me every single one of these scams will be on my list of things to avoid. I never had these problems when I rented from a smaller local company. Lesson learned.
Where’s the “growth”? …So-called Defense. Assuming you haven’t ever said or done anything “anti-American” that the NSA has picked up (and they can find anything), then you stand a minuscule chance to get into one of the openings. Then if you get the job, you can feel gratified you’re serving the interests of “freedom” and “liberty” as you’re helping to design or build the latest weapons to be shipped to Saudi Arabia.
There might be plenty of jobs, but the jobs might suck and the rents might be too high. Never mind that a lot of former homeowners are now going to be renters for the rest of their lives.
There’s something existentially lonely about a capitalist economy. Can’t we just give up and adopt the Christian communism of the Apostles as described in Acts 4 32-35? There should be a more elaborate description of this formation in Peter McLaren’s new book, due out this July.
“I am sure Naked Capitalism readers can clear up what a Bloomberg headline screams is an “American Mystery Story,” that the economy is creating more jobs, yet retail sales have fallen three months in a row, with the latest being a 0.6% decline in February versus an expected increase of 0.2%.”
Paul Craig Roberts has been hammering on this for some time now and lately has been saying the Feds are cooking the books when it comes to jobs reporting.
If 50% of the population has two jobs and the other 50% is unemployed, then the unemployment rate is a fantastic 0%. Judging by how often I see people with at least two jobs, I wonder how far this goes in explaining the discrepancy between the official unemployment rate and general economic sentiment.
if you believe the government data, the employment situation is as good as it gets; 2014 was the best year for job creation since 1999, and the best year for private job creation since 1997…job openings, released two days ago, were the best in 14 years, and population adjusted claims for umployment are the lowest in BLS records…
and as i commented on Spencer’s post at Angry Bear, the only one who had retail sales figured right, the three business types other than cars sales seeing the largest declines in February retail, building materials and garden supply stores, which saw sales drop 2.3%, and general merchandise and electronic and appliance stores, where sales fell 1.2%, may well have been affected by the colder and snowy normal February in a large portion of the eastern US…and while such weather may impact retail, consumer outlays may be directed into other sectors, such as utilities and snow removal…
with a 0.24% decline in sales ex auto and gasoline, we can’t guess if other real retail sales have fallen or not until the February consumer price index is released; it may be that even though consumers spent less, they might have bought more goods…and if they bought more goods, that means more goods were produced, which would add to GDP…similarly, we can’t tell if the lower sales are hurting the retailers until we get the trade margins data from the February producer price index…for instance, if real sales fell 0.2% but margins rose 0.5%, then retailers did 0.3% better in February than in January…
Follow on to anonymous 123 from the other side of the Bay (Silicon Valley).
Ibid on housing — little available and breathtakingly expensive. RE market on fire — we’re back to millions for modest homes. But that’s an artifact of little infill available, lots of money sloshing around (LOTS of Chinese money) and taxes/Prop 13. Most houses that cone up for sale are death/retire/move out of area. Very little “move up” buying – lots of people have a home purchased in 1994 with an 3k year tax bill that’s worth $1.5mm — so sell and go where? Apt. rents are out of sight — $3k/ month for 1br is typical.
TONS of help wanted at large retailers — don’t know who can afford to work there and live here. On the other hand small retailers are dying — rents are simply too high to support many small, independent businesses. Retail spaces vacant for 3/4/5 years. Of course, Prop 13 helps long term commercial landlords as well – if your tax basis is from 40 years ago you can wait a LONG time to “get your price”
Lots of new cars and restaurants are full. I know it’s a cliche, but Dickens comes to mind……………….
Completely agree. There’s so much foreign and tech money sloshing around, it’s ridiculous. At least the foreign buyers aren’t parading around town like these obnoxiously blasé entrepreneurs and Google types. I really don’t know either how normal workers can afford it here. The people I know in SF/Berkeley who make modest wages and still stay are the ones with rent controlled apartments they’ve been in for many many years and will never move out of.
The tech bubble needs to burst sometime though. I’ve been spending the evening analyzing the 10K of this one formerly hot tech startup that IPO’ed last year, and where the stock price crashed and burned pretty quickly. And it’s very obvious to anyone paying attention that this company, who built a flashy new office and is filled to the brim with bright-eyed Stanford GSB and HBS grads, is going to tank in the near to mid term. They got something like >$100M in VC funding, and it’s all going down the toilet because they have a fatally flawed business model. I think that’s very true of a lot of these companies that have cropped up here in the past 5 years or so. I give it maybe 2 or 3 more years before the whole thing comes crashing down.
. . . they have a fatally flawed business model.
Fatal for the bag holder public. The insiders make out like bandits.
1. Food is excluded from CPI, and food packaging has radically changed in the past 7 years. We used to buy sugar, coffee, flour, etc., by the pound. No more: we now use 12 ounces. I suggest (sarcastically) the gov’t switch to metric to further confuse things.
2. Unemployment is such a bogus figure due to the expiration issue. U6 is far more meaningful, and thus it is no longer announced. We do know that labor participation rates continue to drop. And a significant number of people fall off the rolls every cycle due to the huge amount of time they’ve been out of work. Awesome!!!
3. I speculate here, and welcome corrections. BLS income numbers don’t correctly distinguish jobs that provide insurance vs. those that do not. I strongly suspect large-scale employers are converting a significant number of employees from full-time to part-time to avoid health-care expenses. I similarly expect the job gains are in jobs that don’t require insurance. So, the average consumer gets to pay for their own insurance while the idiots on CNBC proclaim everything is awesome.
What recovery? Employers are in the driver’s seat. And woe unto you if you are 45+ and unemployed. I’m counting my blessings, yet constantly worried and stressed.
The only hope is another bubble or revolution.
Moved to Reno about 18 months ago from San Diego. Reno has a much more vibrant entrepreneurial community than I expected, with a large percentage being Bay Area transplants who have simply had enough of the crazy costs and congestion.
The Tesla battery factory being built here is a huge shiny object. Local economic development groups predict the area will add 60,000 jobs, a 25% growth, over the next 5 years. Speaking with friends at executive recruiting firms, most jobs they are trying to fill today are indeed jawbs. Having trouble filling these, and even talk of running buses up and down the I-5 and 99 corridor in Calif Central Valley to bring in workers.
I was told a couple of nights ago that a city of our size should have about 3500 houses for sale at any one time, but current inventory is about 600. And there are major developers who are not going to sell any of the new homes they are building but instead will rent them out for a time, eventually selling when they have benefited from the anticipated appreciation. Potterville, anyone?
While that’s where our current situation stands, I think the path for this area is not so straight as most seem to believe. But when the day does come to pay the piper for central bank follies, and the SF/Silicon Valley malinvestment implosion happens, this region will likely benefit overall. Of course, there is that pesky issue of having some water to drink…
You think the California Water Wars of a hundred years ago were bad? You ain’t seen nothing yet. See:
http://en.wikipedia.org/wiki/California_Water_Wars
I was gonna point to the same issue, among others…
I sang for Reno’s desperately-cash-poor-probably-gonna-close opera company 3 years ago… unbearable heat combined with negative humidity makes breathing there akin to inhaling sand. Casino culture surrounded by poverty (the “important” people live in Tahoe) is hallmark…
but it does have the world’s largest bowling alley…
One of my co-workers heaved a giant sigh of relief when we hired her over 5 years ago. She had lived & worked in Reno for quite some time and had found it be a decent place to live, etc, plus has family in the area, etc. But 08 was a huge crash for Reno, which went straight into depression.
She held onto her house until just recently. Rented it out, which was a hassle but helped pay mortgage whilst also paying rent in Sacramento. Sold home recently for a “really good” price due to the anticipated Telsa battery plant. Of course, now she’s faced with the housing bubble in Sacramento where prices have skyrocketed, so she may be renting (rents are ok here) for a while longer until the next bubble bursts.
Nevada is a weird place. It’s all so “great” bc low/no taxes, but then reliant on gambling to fill in the gaps. I’m not all that clear on how well Las Vegas is doing these days, but Reno was always the poor ugly stepchild and never had the cache of Vegas. I know at the worst of the depression the casinos in Reno were hurting bad, which means no money for the economy on various levels. And of course only jawbs available in Reno until Tesla plant built. But I wonder what kind of jawbs will be provided by Tesla? For sure there will be some percentage of management & high tech workers who get fairly well, but it’s a plant, so what will the workers get paid? I doubt it’ll be unionized. Good luck with that.
It’s pretty much boom ‘n bust there, plus water issues. Some like it. I’d be cautious, myself.
How long ’til Mandatory Shopping Act?
Everyone is expecting the population to releverage. Wishful thinking.
The group winding down (boomers) is larger than the group winding up. And the group winding up (Gen-X and Gen-Y) is probably still full of debt from the previous orgy.
When they were in their 40s, the boomers could be hopeful… A significant proportion of 35-50, Gen-X and Gen-Y, have come to realize that the move up strategy is bogus. They won’t have pensions plus will need to support their parents who recently found out they won’t have any either.
Cutting rates to 0 forces the savers who are already risk averse to save 2X or 3X more than if rates were 5+%. ZIRP rewards the reckless.
Leaders who cut rates and sit and wait to witness the trickle down are clearly out of touch.
Charlotte NC is a mixed picture if you look closely. The city continues to benefit (economically that is) from southward migration. That is a trend that I believe will continue to the extent that people can sell their houses up north. The city is exploding with apartments 10k units built and 10k units announced; but I think it may be even higher than that. Recently local developer gave the run another 12-18 months before way overbuilt arrives. I think we’re already there because demand is being supported by the recent ‘updraft’ in the economy that I think is largely due to QE and pent up demand that got unleashed in early 2014. In close in neighborhoods, builders are putting up expensive houses/townhouses on every last parcel they can find. And the teardown/mcmansion approach that stopped dead cold in 2008 has picked back up; although to not the same extent.
But there are cracks in all this veneer. I work from home and drive errands/walk during the day so I see some of the things the average corporate worker may not. Like Yves, I sense a general slowdown (although some days it seems we’re back to frenetic lifestyle). Construction will come to an end this year I feel certain. When that happens, the last engine of this mini-boomlet will die. Then we’ll see who’s swimming naked again.
Not that far from you- the only construction going on here is corporate except for a HUD funded middle income housing project on our road. Housing is stagnant- the same properties over and over being listed, delisted and relisted. As far as things go it almost feels like a game of musical chairs with you waiting and wondering who is going to be left without a chair when the music stops.
It’s very hard to believe that Michael Bloomberg became a multi-billionaire publishing such useless drivel as this.
“Payroll employment has been great, and it is generating a lot of labor income that you think would be spent,” Herzon said. “March should be a rebound. Our story would be wrong if it doesn’t happen.” (Emphasis mine.)
Certainly a lot of serious “analysis” going on in that statement. Not.
As for the chart titled “Hoarding the Pump Savings, Consumers have started socking away a larger share of what they haven’t spent on cheap gas,” SOCKING AWAY???? The “socking away rate,” more commonly known as the “savings” rate, includes paying down debt which, by just about every indication, americans have a sh*tload of. And, if Greece is any indication, they will, at some point, be expected to pay back. With interest. Which buys absolutely NOTHING.
I don’t think this “mystery” is quite as “mysterious” as Bloomberg would have us believe. I don’t remember exactly, but I think it was Keynes or Greenspan or Robert Rubin or Mark Zandi or some other member of our economic brain trust who said it best.
“You can’t get blood from a turnip.”
Those people are economists or banksters. They believe blood comes from turnips, because we act like turnips, and defer to their “expertise”, when we should be seeing their heads on pikes.
Boston gives the appearance because of the extremely high concentration of academia, finance, law, and healthcare systems/hospitals. Once you go Westward, outside the Route 95 belt, it’s a far different story. Massachusetts has become one of the most income disparate states in the country, and it’s residents classified as “poor” has skyrocketed. The money here stays at the top, there is no “trickle down” economics going on here.
I live in the South End. There is a lot of serious construction ongoing, mostly high-end residential. Where will all the millionaires come from to occupy those buildings? Beats me. The people I know are still struggling.
As for Yves’ wonderment:
I’m thus mystified by the uniform tone of boosterism in the media about the state
The Corporate Media is in the business of getting the American people to part with their money and transfer it to the corporatists. The CM is not in the news business. I regularly scan Google News and see economic articles from Reuters, NY Times, Boomberg, WaPo, WSJ, etc. that are interchangeable and read like local chamber of commerce puff pieces. Can you trick people into spending money they don’t have? I don’t see how, no matter excellent the quality of the propaganda, but that seems to be the plan. What did Bush advise Americans to do in the aftermath of 9/11? Go to the malls and shop. The American people are merely ATMs for the corporatists, that is our function, and the Corporate Media’s job is to make it happen.
The economy is doing great in Boulder County, Colorado and the Denver area in general. The housing market is crazy strong with quick sales, often above asking, in Boulder County. Many people moving here with jobs lined up. Google is building a new “campus” in Boulder. Lots of ugly,IMHO, new high density housing going up everywhere. Louisville, near Boulder, is experiencing tear downs and new house building in the charming old town, and its suburban family houses, in a very tight market, are appreciating like crazy. And rents are ridiculously high all over. Appears people are spending on basics, housing, healthy food, sports, but the nearby fancy mall is struggling. There are lots of empty store fronts and office space around Boulder County.
Usually this time of year we see lots of large screen TVs and furniture purchases loaded up on the pick up as people get their taxes back. I haven’t really noticed that this year. As far as business goes we’ve lost and gained some. We lost Ryans and gained a Golden Corral. We lost a BP that became a Circle K. I suspect we’ll lose another mall business with Radio Shack in bankruptcy. They still haven’t replaced the Sears with anything. Some of the businesses appear to be hiring but it’s mainly the low paying ones that want you to forgo a life for them offering you $7.25 an hour- The $9 an hour bump at Walmart hasn’t changed the Walmart experience much or the pricing of the local labor market overly upward. All in all, like others I’d say things are a mixed bag here.
http://moweekly.commercialobserver.com/03132015.pdf
Seems the commercial mortgage lenders agree
The gains in the ‘recovery’ has been unevenly spread. In what used to be the middle class some are money rich but time poor, others are time rich (unemployed) but money poor. The ones with money don’t have time to spend it (on other things than mortgage etc), the ones with time simply don’t have the money to spend.
The ones who never lost their jobs has in monetary terms had a fairly decent time. They might have been forced to work unpaid overtime to cover for colleagues who were let go and while some consider work to be a blessing for others work is something that is done to live. Hence they get stressed from work and stressed from the real risk of losing their jobs -> the risk of getting stress related illnesses increases. & want to start a family? Well, 60-80h work weeks makes it difficult to have anything but professional relationships so good luck with that.
My guess is the distracting economy will grow i.e drugs (legal and otherwise), entertainment and stress reduction. Other economy is likely to continue to have job-less recovery.
I tend to agree. I think what we are experiencing is both a recovery and a non-recovery at the same time. Recovery for the upper end of the work spectrum, continued non-recovery at the lower end. I think everyone on the bottom half of the economic spectrum has now accepted that they will not be seeing any income gains or lifestyle gains, so they’re digging in and cutting spending / maintaining lower spending to live within their means.
When I see articles and data like this I think the subtext is that people aren’t using credit to live beyond their means. That, more than anything else, strikes me as what the real story is. Living beyond your means via credit may be a thing of the past for everyone except those with extremely stable jobs. You need optimism to buy things on credit – optimism that you’ll have a job and the means to pay off the money being loaned to you by the creditor. There is no optimism.
Things are not good in the DC area. Job growth in this area has been among the lowest of all metro areas (as reported more than once in the Washington Post) since the sequester. Furthermore, what jobs there are heavily concentrated in the national security sector so if you’re like me and are not willing to work in that sector you’re pretty much screwed. I’ve been out of work for more than a year and a half since losing my last job so this is something that I’m very aware of. I’ve rarely seen a job market as bad as this one in my lifetime.
I don’t doubt what you say — but D.C. was about the only location where I had any chance of landing a re-assignment with the firm I worked for these many years. Just as you indicated almost all the assignments had a strong national security flavor. That is a level of disgust even hunger cannot overcome. If things are bad in D.C. I’m ready to get really-really scared. I don’t remember a job market as bad as what I’ve experienced so far since I started work in the shadow of the man-on-the-moon collapse of jobs in engineering.
I live part time in Sacramento, CA. Sacramento is experiencing another housing bubble. I’m sure a lot of the high priced home sales are going to speculators/investors from China & the Bay Area, as is the usual case here. In their infinite non-wisdom, the bought-off Sac City council approved a giant housing project up in the low foothills near Folsom. Crazytown given that CA is heading into a 4th year of drought, and we’re facing serious serious serious (did I say serious?) water crisis issues. Folsom gets really HOT in the summer and very very dry… think fire danger. But the local nooz is all in love with this fabulous “project.”
Renting here can be ok financially depending on where you are willing to live. I have very low rent in a great complex that is not far from where I work in downtown Sac. The younger crowd all want to live in desirable urban MidTown, and I understand that rents there are pretty high and getting higher. But you can find a nice rental for an affordable rate if you are flexible about where you live.
Some prices in the housing bubble are back up to 2008 nutty pricing. I wouldn’t advise anyone to buy now unless totally needed and have a huge down payment to keep mortgage rate low.
Sacramento is climbing out of the depression. This a govt job town with many employed at the State, county or local level. Lots of jobs were slashed at all govt levels after 08 but some cautious re-hiring is happening. People here, though, are mostly solid middle class or lower. We don’t have a lot of super rich people who live here.
I know quite a few people who lost jobs and some are STILL be down-sized. While the job market has picked up a bit, you really need to have specific skill sets. And most of the govt jobs only pay so-so, albeit the benefits are decent (just barely) and you *may* get a pension at the end.
People are not spending because they’re afraid, and they’re wise to be afraid. People are trying to save because they learned a lesson in 08. It was probably past-due, but people see that jobs are insecure, health care costs are increasing exponentially. food is expensive, and only gas at the pump has gone down but is now on the rise again. Who’s got a lot of “extra” cash to spend on stuff? People are trying to save and spend only on necessities and make do.
I guess Bloomberg and that ilk think if they write these lying screeds somehow that will “make it so”??? I really don’t know. I get it that the rich and the obscenely wealthy still remain out of touch with the reality that is the lot of the vast majority of citizens. But this kind of “feel good” nonsense is stupid. Most citizens, no matter how much they want to cling & grasp to trickle down lies & fake libertarian-y you can pull yourself up by bootstraps lies know in their heart of hearts that the system is f*cked and just getting worse, not better.
Hold onto your hats, my friends, as it continues to be a bumpy ride.
think this fact sums it up…the vast majority of new car loans are for 6 years or longer
http://www.thetruthaboutcars.com/2015/03/chart-day-8-years-slave-redux/#more-1021193
and i’d add that in my brother’s top 1% of the bottom 99% neighborhood, there is at least a 12 months’ worth of supply in speculatively-built teardown McMansions.
Sales have been flat for going on 8 years now. Recently we have had some employee turnover. Many
of the applicants only wanted to work part time. Many of our part time hires have left to go back to full time
job offers in their field of choice. We have had a lot of job applications but most are people with fast food or warehouse experience. I would say based on my experience in Chicago area that the labor market is beginning to
tighten a little bit, wages are slightly up, but retail sales have not begun to recover. There is way too much retail space available in Chicago.
Demographics must be a large element in this mix as the 55+ age group continues to grow relative to the overall population there spending habits have to be a big part of this picture. Myself as an aging boomer our house is paid for, furniture paid for, eat out rarely, no plans for any new auto, not interested in fancy European vacations or get away’s well U get the idea. Staying local, nice garden for fresh food and flowers, wife and I both have our favorite active sport interest for exercise but the bottom line is we don’t spend much money on non essential items as our needs and desires for more stuff has declined.
My guess is that household formations are still low as the 2007/8 financial down cycle has impacted this group the hardest in that family formation requires the most income to support a new family.
Demographics must be a large element in this mix as the 55+ age group continues to grow relative to the overall population there spending habits have to be a big part of this picture. Myself as an aging boomer our house is paid for, furniture paid for, eat out rarely, no plans for any new auto, not interested in fancy European vacations or get away’s well U get the idea. Staying local, nice garden for fresh food and flowers, wife and I both have our favorite active sport interest for exercise but the bottom line is we don’t spend much money on non essential items as our needs and desires for more stuff has declined.
My guess is that household formations are still low as the 2007/8 financial down cycle has impacted this group the hardest in that family formation requires the most income to support a new family.
A lot of the wisdom, or just bitter experience, of the Great Depression got reduced to aphorisms. The kind I heard, repeatedly, from my parents and grandparents (I was born in 1946, so I guess as a white male Boomer I am to blame for all of the current situation, right?) One such aphorism:
“Eat it up.
Wear it out.
Make it do.
Do without.”
Without an Applewatch? Please!
I WOULD like a Jubilee, whether granted by the Rulers as a means to avoid the Whirlwind, or enforced from below by the lower orders’ declining to be stripped bare. Some sources, to be discounted of course by the Holders of Debt and the too many “puritans” that see debt as a Holy Institution Created By A Just and Vengeful God:
“Planet Money, Episode 587: Jubilee!,” http://www.npr.org/blogs/money/2014/12/05/368723679/episode-587-jubilee
Forbes: Could A Debt Jubilee Help Kickstart The American Economy?”http://www.forbes.com/sites/erikkain/2011/10/05/could-national-debt-forgiveness-help-kickstart-the-american-economy/
There’s interest in the notion, too — http://www.jubileeusa.org/home.html, and the Jubilee Debt Campaign, http://jubileedebt.org.uk/ , among others.
A couple of little random links on Rhyming History of Economic Abuses: “Household Debt and the Great Depression,” http://houseofdebt.org/2014/03/15/household-debt-and-the-great-depression.html, where one reads:
In November 1930, before anyone knew how Great the Depression would be, Charles Persons published an article in the Quarterly Journal of Economics called “Credit Expansion, 1920 to 1929, and Its Lessons.” His thesis was stated forcefully in the first paragraph:
“The thesis of this paper is that the existing depression was due essentially to the great wave of credit expansion in the past decade.”
He then meticulously documented data on the stunning growth in borrowing by households during the 1920s. As is common in the run-up to severe economic downturns, there was a tremendous growth in mortgage debt. “The great field of credit expansion in the last decade lies in the realm of urban real estate mortgages”, Persons wrote. In nominal terms, outstanding mortgage debt grew by more than eight times from 1920 to 1929, according to Persons.
Persons also highlighted the rise in installment debt, or consumer debt used to purchase new furniture, clothing, sewing machines, and cars. Martha Olney at Berkeley examined the rise in purchases of cars and other durables during the 1920s, and concluded that “societal attitudes toward borrowers changed radically between 1900 and 1920; by the mid-1920s, buying on credit was considered normal, not sinful.”
Persons concluded his 1930 article with a statement that is eerily similar to many we here today: “The past decade has witnessed a great volume of credit inflation. Our period of prosperity was based on nothing more substantial than debt expansion.”
Both the Great Depression and our recent Great Recession were preceded by large increases in household debt driven by new lending technologies. The 1920s had the installment loan; the mid-2000s had the subprime mortgage loan. Is it a coincidence that the two most severe recessions in the last 150 years were preceded by a dramatic expansion in household debt driven by new lending technologies? This is a central question of our book.
And for a sample of what “educators” are filling the heads of students with, regarding “the business cycle,” there’s this: “A Student’s Guide to the Great Depression,” http://economics.about.com/od/recessions/a/greatdepression_2.htm
Heavy analysis, right? Leading the “student” to what inescapable conclusions, again?
One other point: There are a lot of people here with much wider exposure to the writings of the Elite and those who apologize for and enable them. Is there a playbook, in maybe primer form, that lays out for those folks the essence of the Kochian Great Plan to reduce everything to ownership and rental, while poisoning the planet and demolishing anything of decency and sustainability that humans might be otherwise able to achieve? I mean, other than the screenplay for “Soylent Green?” That includes how to saddle us with end-game combusto-consumption, Forever War, all the little tricks to get people to bury themselves in non-dischargeable student loans in the hope of Better Lives, “sign and drive,” payday and title loans, rent-to-purchase, reverse mortgages, derivatives, security state server farms in lieu of food crop growing, all that stuff on the list that all goes on and on?
These people who have figured out how to profit and oppress must have some kind of text they are working from, other than “Fountainhead” or “Anthem”? Maybe a study of that source with an eye to knowing the enemy might be productive?
I saved your chain of aphorisms. I’ve been channeling my Grandma Zola for years, cleaning and saving jars — but as for students from what passes for public education — have no fear. My children remain tabla rosa after their indoctrination to public education — “No Fear” like the T-shirt logo.
I’ve read and scanned your comment a few times. I’m not entirely sure what you are saying or suggesting. Your post seems to disparage debt but I’m not sure what you are saying beyond that. Are those pushing credit “bad”, or those pursuing and receiving credit? What exactly are you saying?
In 2006, as the credit bubble grew, I thought things around me looked an awful lot like the description of the credit/mortgage/binge/expansion preceding the Depresssion as covered in my high school social studies class. And then boom. 2008, and it seems like everyone is surprised by the turn of events and I’m left wondering, I’m not a genius, did no one pay attention in class? It was right there in black and white in the standard issue high school history book.
Seattle feels to me like it’s living a double life. Tech company owners and shareholders are doing great, and the companies keep expanding (Amazon continues to build massive new projects around the city). The company I work for deals with the high end of the construction industry and we’re seeing optimistic, ambitious projects from developers who are focused on that end of the market (anybody want a high-rise condo that will have an awesome view of the Sound until the next developer comes along to put up something even taller between you and it?). But at the same time, a lot of the little retail establishments seem to be closing up shop, and then the spaces sit empty for months at a time. The homeless population downtown seems to be getting younger and whiter. (And bigger – checking stats really quick says we’ve seen a 20% increase over the last year.)
Sort of a microcosm of the whole, I guess.
One other point worth noting is memory. People, unlike the “rational economic agents” actually have history and memory. People that I know who have jobs are still far more careful about discretionary spending than they used to be and I find it hard to believe that someone who just came off of unemployment is going to turn around and blow cash on a new lexus. Even if they just got a job upgrade or, more likely, a lower paying jawb that may make ends meet, they are likely to still be carrying debt that must be paid down or even to be accruing additional debt making ends meet on their current salary.
I think that Bloomberg’s brain trust is not even looking out their own windows on this. They are probably just listening to the soothing words that bankers keep whispering in their ears.
I am here in SW Florida. Unlike 2008 if you want a job you can now get one. But the cost of living has risen far faster than wage, especially for rentals. That goes into Yves quip about “jawbs”. The mall here is busy and the snowbirds with wealth shop. But when they leave you don’t see locals buying, just eating at the Food Court and walking around for something to do. Reaidential constuction has increased as a good sign but its still a very weak economy. Better than 2008 for sure but very weak nonetheless. The local news now reports tax evasion of commercial and big RE developers which is positive because Florida in general has gone the police state route for tax collection to make up for corrupt tax evasion schemes for the big monied interests.
I live in southern Ventura County CA. Seeing lots of retail and restaurant closures, and fewer people at the malls except the ones who go there to walk. Upscale places are the only ones I see with much traffic. Noticing an increase in the number of nicer homes for sale in old established areas plus know of some people offering off the books boarding for properties zoned for horses to make extra income. Two major grocery chains stopped making fresh deli salads, a worker told me it was due to saving on labor plus sales were down – odd to see that same thing happen at diff stores. A friend who works in an upscale derm office says vanity treatments are way down – which is their bread and butter so hours are being cut below health ins minimums. Marked increase in the number of local homeless people out and about, drug stores are having big problems with shoplifting.
The vibe is not good here at all, people at the gas station seem happier tho, and gah it’s 90 degrees today :(
What kind of jobs are these? What is their pay, benefits, etc? What do the debt loads of working class people look like today? More jobs without context means nothing to me and it shouldn’t mean much to anyone else.
In my area, Central New Jersey, I’ve noticed several supermarket storefronts vacant for multiple years. The local shopping center churns and sheds occupants beyond any flux I recall from the past. We do have a second bank and a second health-club new to the local shopping center. But I also noticed a lot of continuing and new vacancies.
Overall, those who remain in my area seem fairly well off, but I have no idea how much fear and dread seethes under their surface; I suspect more than I hear or directly see. I feel this is not a growth area, nor even a stable area for employment. The bulk of my impressions are downcast, grimm.
I’m a retired teacher, been working at the local post office as a rural carrier for 18 years. This has been our best year since The Crash of ’08 for parcels – we have been inundated since October of last year, and the Xmas rush was crazy. Our county is where Toyota is located in Ky. and I’d say half the customers on my route hold jobs that are Toyota-associated. A lot of the counties in central Ky once depended on tobacco farming and industries located in Lexington for their economic welfare, but that was pretty much dead by 2000. Toyota saved us. For that reason, the Crash hit us less than it did other areas of the state. All the same, consumer spending slowed WAY down, and is only just now coming back from the depths. Quite a few families on my route got a scare in ’08 and haven’t rebounded to anywhere near their pre-Crash online ordering levels. (Don’t want to make anyone paranoid, but your letter carrier can analyze your personal spending levels down to the dollar if asked, just by observing where from and how often you get your bills/second notices – we don’t tell – it’s unprofessional).
Housing sales are just now coming back from total annihilation – by the way, if you want cheap housing, compared to CA or NY, come to Ky. Just jawbs, here, however. Most families have at least two!