Are we already in a recession?

[RockstarChris]

recession was created as a way for poor people to not address the underlying problems of why they are poor. go get a job. and thats coming from a guy who hasnt had a real job in over half a decade. im retired.

 

[Jake the Muss]

Just a hit piece. When the bubble popped the entire industry crashed. All unfinished developments where abandoned, existing housing crashed 30-50%.

That place is out in the middle of nowhere. Probably still like that today. He says riverside but probably riverside county, not city.

Any location people want to live has pretty much recovered today if not hit new highs.

Here is what riverside real estate has been doing.

For a few years there were these things called zombie houses. People who couldnt make payments and abandoned the property.

Houses went to crap.


Today there are not enough houses on the market in ny.

People are out bidding each other and and sellers are getting 20 to 40 thousand more then what the asking price is.

This next gen has a lot of their parents money and more wealthy foreigners then anything.

Wealthy and offered special loans help them. Special car loans, special home loans.

So they can pretend to be an American and drive a BMW and have a a home

It isn't just a hit piece. I have gone to these ghost towns near Silver Creek in San Jose and witnessed it with my own eyes. I used to make exploring the area my daily exercise route.

Home after luxury home where it either had a for sale sign, or it was completely empty. I counted at least 4 neighborhoods and 1 commercial park that looked vacant like the town in that video.

It was one of the reasons why I picked that route....there was nobody around. It made me think of how many other places like this were being built around the country.

Of course there are going to be pockets of areas where things are going to be thriving, even during a recession, but the effects of a recession and depression are not evenly and concertedly distributed. You won't know if the projections were right until real estate transaction activity is reported, which is a lagging indicator.

Also, the image you posted didn't load. In any case, if the government found a way to manufacture the unemployment rate the way they did, I have no doubt that the supply and demand for real estate is off as well.

 

[ndwolfwood]

recession was created as a way for poor people to not address the underlying problems of why they are poor. go get a job. and thats coming from a guy who hasnt had a real job in over half a decade. im retired.

This. A recession is a justification for a lack of effort just like identity politics.

Maybe recession is white peoples way of saying white privilege.

 

[RockstarChris]

This. A recession is a justification for a lack of effort just like identity politics.

Maybe recession is white peoples way of saying white privilege.

If you tell people enough times that the sky is falling eventually people will believe it.

 

[drstrangelov]

In terms of things that matter to your average worker, the economy seems very strong right now. Unemployment is low, there's still a ton of money being spent, so competition for talent is driving up salaries.

Ive had local competition offer 6 figure salaries to people I hired at entry level, less than two years into their careers. I don't know if it's like that everywhere, but anecdotally, I'm feeling more restraint on growing my business from limited qualified workers than from lack of available funding.

 

[Jack V Savage]

Interesting so if there is no reward for investing in long term debt and actually a penalty then the bets are that future short term rates will drop dramatically in response an upcoming recession? Why the 10mand 2?

I don't think the inversion of the spread actually *causes* a downturn. Just indicates a signal from the market that one is on the way (basically that near-term risk is greater than mid-term risk).

 

[Gandhi]

I don't think the inversion of the spread actually *causes* a downturn. Just indicates a signal from the market that one is on the way (basically that near-term risk is greater than mid-term risk).

Yeah I get it, its a signal. I was saying that we expect ST rates to be cut in the future so the long term rate is lower but I see what you are saying (ST risk > LT risk). Why the 10 and 2

 

[Execute]

In terms of things that matter to your average worker, the economy seems very strong right now. Unemployment is low, there's still a ton of money being spent, so competition for talent is driving up salaries.

Ive had local competition offer 6 figure salaries to people I hired at entry level, less than two years into their careers. I don't know if it's like that everywhere, but anecdotally, I'm feeling more restraint on growing my business from limited qualified workers than from lack of available funding.

We're in the same boat. We can't find enough people and salaries have gone up quite a bit in the last few years. Not sure what industry you're in though.

 

[Jack V Savage]

Yeah I get it, its a signal. I was saying that we expect ST rates to be cut in the future so the long term rate is lower but I see what you are saying (ST risk > LT risk). Why the 10 and 2

You mean as opposed to other ST/LT spreads? I don't really know. Volume, maybe?

 

[ndwolfwood]

We're in the same boat. We can't find enough people and salaries have gone up quite a bit in the last few years. Not sure what industry you're in though.

In our industry (trucking), we are short something like 280,000 drivers.

 

[Execute]

In our industry (trucking), we are short something like 280,000 drivers.

At one point I bought into the self driving hype. Wonder if that played into the lack of supply in your area?

In IT (pure anecdotal) I've seen a lot of old folks retire with the market rebounding over the last decade...combined with the rapid evolution of technology....we just can't fill positions.

 

[ndwolfwood]

At one point I bought into the self driving hype. Wonder if that played into the lack of supply in your area?

In IT (pure anecdotal) I've seen a lot of old folks retire with the market rebounding over the last decade...combined with the rapid evolution of technology....we just can't fill positions.

There's so much bullshit truck drivers do that you can't realistically expect a self driving truck to make deliveries. Receivers and customers aren't going to spend money on manpower (plus insurance and taxes) to make sure the machines are being backed into specific doors. It's easier and cheaper to have a truck driver.

There are lots of jobs out there and there is money being spent constantly. I blame the boomers first of all, for buying and pushing this recession shit. And the millenials as well for thinking they can pull the same act.

 

[Stoic1]

I'm going to just keep working, saving, and investing. You guys let me know when it's over.

 

[IdahoCBR]

isnt that just like the last recession?

Not necessarily. Yes, housing prices skyrocketed in the years leading to the '08 crash but it's not really the same. In most areas, especially ones hit the hardest, houses were being built by the hundreds or even thousands without buyers for them. Eventually supply surpassed demand and the bubble burst.

Currently, most new construction homes are under contract with buyers already lined up. So the price increases are "healthier" in the sense that there is more demand than supply.

 

[Gandhi]

You mean as opposed to other ST/LT spreads? I don't really know. Volume, maybe?

Yeah was wondering what it meant vis a vis the length of the average business cycle, expected fed reaction time, etc.

 

[IdahoCBR]

npr ran a story yesterday about increasing credit card debt on a national level.

Theres a shit ton of people putting medical expenses on credit cards or loans due to a lack of or insufficient health insurance. Its pathetic that in the wealthiest Country in the world, there are 100's of thousands, if not millions of people going bankrupt for no other reason than genetic illnesses/deficiencies being passed down to them

 

[Shoemaker]

Housing construction is a poor metric.

Upper class housing poorer still.

I was living in Las Vegas at the time of the last recession, and up until that point they had been building a lot on prospected growth. When the market finally crashed, demand fell but there was still a lot of unsold inventory.

Spoiler: Tangent

So much of that construction was awful too. 3 story homes on like 1000sqft lots. So close to your neighbors that you could pass them sugar through your kitchen windows.

 

[IdahoCBR]

The unemployment numbers are bogus. The Bureau Labor of Statistics (BLS) have changed the way unemployment is calculated so that discouraged workers (people who have been out of the workforce for more than 12 months) or people who have temporary work are not included.

According to shadowstats.com (which is based on the previous way the government calculated unemployment) the real unemployment number for April 2018 is 21.5%. That number seems a lot more realistic, compared to BLS' 3.9% calculations.

If companies started hiring all of those unemployed people, and those people started spending all that hard earned cheap money, it would increase the money velocity (spending, exchanges, transactions), and inflation is going to pop.

If decision makers are basing their needs on the way things are currently calculated, then it is only a matter of time before theory meets reality.

I can't speak on the backlogs, but I can speak on historical events and I can speak on the phenomena of ghost cities. But that doesn't bother people I guess. As long as they are paid in full, none of what I am saying really matters.

Also, there are loads of things they could set off the next downturn. The derivative markets, runaway inflation, interest rate hikes, a spike in oil prices, a terrorist attack, war, etc. It may not impact the real estate market the same way it did last time, but all that artificial demand would quickly dry up.

That is not even being a doom and gloomer, that is just someone who is reporting on stuff that is already in motion.

21% unemployment!? LOL, what kind of right wing propaganda bullshit is that? I cant speak for every market/local area in the US but I'd believe the 3.9% figure. Boise is ~2.8% unemployment and there are help wanted signs everywhere. Restaurants, banks, retail stores, construction, transportation, etc. Basically, if you want to work, you can easily find a job.

Im a Union electrician and have worked throughout the Pacific NW the past couple years. Every trade and damn near every contractor needs help. Electricians, plumbers, iron workers, pipe fitters, carpenters, glaziers, heavy equipment operators, masons, etc. The previous project I was working on would take weeks to get our equipment delivered to the job site because the trucking industry was so understaffed. There's even companies offering up to $200 per diem to get tradesman to man the jobs. Its ridiculous how much money is to be made. Counting benefits, I made over $150k in 10 months last year.

My point is that if all of this isnt a sign of a robust economy, I dont know what the hell is.

 

[JamesRussler]

I almost hope so because the fucking housing market has become a bubble again. No one can afford to buy in Cali.

It's not a bubble. It's because of foreign money. They can easily pay more than the asking price. If you don't believe me, go to an open house and see who shows up. It's Indian, Arab, Persian, and Chinese speculators, oil barons, royalty, government-backed CEOs, etc.. Half of them just want to tear the places down and build something new (e.g. mosques, strip malls). The other half wants to rent the places out. No single families, unless you're looking at a townhouse or condo.

 

[JamesRussler]

I think it's close. Student loan debt will be the main factor this time.

If students all defaulted at once, it would hurt the banks, but probably help society in the long term. I'd like to see prices reflect peoples' actual wealth again.