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US Economy: News & Discussion

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12 hours ago, MyTwoSense said:

 

You never know how he bought. 

 

 

He bought two houses at age 18 or 19.  His sister bought the two houses right next door.  So there was almost certainly a gift from a family member.  Must be nice. 

 

boohoo.png.c1d6efc98e5720c4797a6e2dd116aec5.png

 

Aaaannnd in November of 2008 so much of the rent had gone up his nose we get to do this:

 

 

 

 

 

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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I still maintain Trump initiated economic anxiety the minute he took office, even among his voters who took a minute to "see what he was going to do". The minute that election happened people just stopped spending except for Buzz the Overpaid Boomer who went on a spree of F-150s, Side By Side UTVs, and other camo-colored and flat black stuff.

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Yes they did! Even Buzz is spent out as dealer lots fill with unneeded vehicles. I almost wonder if the GM strike is actually good for dealers, many of whom that wanted to clear their backlog of stock.

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Any drop in manufacturing could hit legacy cities in the Midwest harder than most others.

 

Cleveland's economic numbers show the Manufacturing Sector employment retracting, beginning in May of this year.

 

https://www.bls.gov/eag/eag.oh_cleveland_msa.htm

 

Cleveland's overall regional economy hasn't been affected as of yet (thank God) as it's no longer centered on Manufacturing, and is still growing year-over-year.  

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Wework is on the brink of collapse.  Just another scam in tech's clothing:

http://nymag.com/intelligencer/2019/10/marketing-expert-scott-galloway-on-wework-and-adam-neumann.html

 

The last two paragraphs of the interview are quite sad.  Apparently much of the staff took relatively low wages in exchange for equity.  Now the company is virtually worthless.  

 

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Wework leases 45 million sq feet around the world, a volume of office space equivalent to downtown Philadelphia . 

 

So all of those landlords are suddenly going to have to scramble for tenants to fill spaces that were all just renovated into coworking spaces.  It's a disaster.  

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4 hours ago, GCrites80s said:

At least nobody is going to trust "tech" anymore... at least for a while

 

I bought and read an old copy (like 1971) of Benjamin Graham's book 10~ years ago, just as the economy was tanking.  He has all of these examples in there where pension fund managers -- not just one, but many across the nation -- made the same mistakes throughout the 1960s (especially the collapse of the Pennsylvania Railroad) because they were all listening to each other instead of analyzing fundamentals on their own and adhering to sound principals.  This was right when mutual funds were starting so he doesn't talk about them much but the same problem exists with fund managers and venture capitalists.  They get so caught up in the emotion and glamour that they can't just chill out and do what they were taught in business school.  

 

My brother is in a top MBA program.  He's going to be north of $100k in debt when he gets out.  I read his syllabi for fun while using his computer and couldn't believe how basic it all was.  It was the exact same crap covered by pop business books.  But unfortunately it was all tilted toward VC-type stuff (one lecture during one class was titled "institutional investors vs. venture capitalists".  I suppose that the business schools are forced to do this because that's what their customers prospective students want.  

 

 

Edited by jmecklenborg

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20 hours ago, Terdolph said:

We are pretty much in agreement.  To make it short, I don't think the Democrats will do anything at all about student loans and were simply making promises that they know can't be fufilled-pure pandering.  I also think that Trump pandered to W. Virginia etc. with the coal mining thing.  It's not because of environmental issues really, it's just that natural gas is so cheap coal can't compete.

 

If you think that the Democrats will do nothing at all about student loans and it's only pandering, then we aren't in agreement.  They will do something, just as Trump's administration made it easier to mine coal, the Democrats will do something to lesson the burden of student loan debt, they just won't make current student loans disappear.

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The coal companies know that and even announced it to the Trumpies over and over. They wouldn't listen to the professionals because Trump goosed their belief system afterburners.

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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https://finance.yahoo.com/news/gdp-report-3q-2019-advance-estimate-economy-203535589.html

 

Q3 GDP growth slowed to 1.9% (and I'd put money on this getting revised down in the coming months like it usually does).

 

Quote

Nonresidential private investment turned negative for the first time since 2016 in the second quarter and contracted again during the third quarter, this time by 3.0%, or the most since the fourth quarter of 2015.

 

Within this, structures investment posted the steepest decline of 15.3%, with economists having anticipated that factors including weaker oil patch and factory spending would weigh on this measure.

 

“The capex numbers were awful,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in an email Wednesday. “Investment in intellectual property strengthened, rising by a solid 6.6%, but it’s less volatile than structures and equipment spending, which appear to have fallen victim to slower earnings growth and the uncertainty caused by the trade war.”

 


Very Stable Genius

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September 2018:

Dow high was 26,743.50 (up 2.7% since).

Nasdaq high was 8010.04 (up 5.28% since).

S&P high was 2913.98 (up 5.6% since).

In other words, growth has been somewhat moderate. It's just the crazy dip last winter has distorted this year's gains a bit.

And that's good. Conservative growth is a better indicator than crazy growth (after which steep declines may follow).

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The constant churn of the digital revolution seems likely to be claiming another victim soon:

 

https://arstechnica.com/tech-policy/2020/01/frontier-an-isp-in-29-states-plans-to-file-for-bankruptcy/

 

Frontier, an ISP in 29 states, plans to file for bankruptcy

 

...

 

Frontier has been losing customers and reducing its staff. Its residential-customer base dropped from 4.15 million to 3.81 million in the 12-month period ending September 30, 2019, including a loss of 90,000 customers in the most recent quarter. Also in that 12-month period, Frontier's business-customer base declined from 422,000 to 381,000.

 

Meanwhile, Frontier had 19,132 employees as of September 30, 2019, down from 21,375 one year earlier.

 

Frontier's financial performance last year was so bad that it refused to take any questions from investors during its quarterly earnings call in August. Frontier is in the process of selling its operations in Washington, Oregon, Idaho, and Montana to WaveDivision Capital.

 

================================

 

Not sure whether to call this one of the largest casualties yet of cord-cutting or simply a casualty of outdated tech even for data delivery (as I understand it, a lot of Frontier data was still delivered over copper).

 

That said, this does make me wonder how big the cable-cutting and/or alternative data solutions earthquake would have to be to bring down Comcast and Spectrum.  Frontier is just a tremor even if it goes to liquidation (and the more likely scenario appears to be that they will strike a deal with creditors and reorganize, but they'll still be smaller).  The real earth-shattering earthquake would be if one of the real titans of cord-based TV and data delivery gets swamped by the next phase of the digital revolution.

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Also any old-school DSL services just can't compete anymore.  My parents live in a semi-rural area served by Spectrum cable, but Dad still wants his POTS landline, in part because the cable does go out, and their electricity goes out a lot due to tree branches and the occasional hurricane.  They also still use flip phones, sigh.  They've had a phone/internet bundle with CenturyLink/Embarq for well over a decade, spending close to $100/month for the phone and 1.5mbit internet.  They can get Spectrum's 200+mbit plan, but Dad still elected to go with a new CenturyLink bundle that drops the $0.10/minute long-distance rate (I can't believe that's still a thing) and gets them I think 15mbit internet for about $85/month.  That's still a ripoff if you ask me, but at least it's better than before.  I doubt they can push much more data over those copper lines though, due to the spread-out development pattern and physical limits of the technology.  Unless a company like this invests in fiber, like Cincinnati Bell, they're likely to just wither away. 

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This is going to sting some, but it's going to crush Russia.

 

 


"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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It's been 91 years since the last big crash and depression.  Some say these things come in cycles.  I do agree with several comments on these forums--at some point we need to consider what damage is worse--the virus or shutting down the entire economy?  

 

Top Economists See Echoes of Depression in U.S. Sudden Stop

 

https://finance.yahoo.com/news/top-economists-see-echoes-depression-110000038.html 

 

 

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Probably the Virus. If there's no people, there's no economy. If the virus and its effects have a prolonged presence, that likely puts a drag on the economy as well.

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People act like if there were no quarantine orders, things would just continue on like nothing was happening. It's a false choice. The economy was going to tank regardless.

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The economy needs supply. With a global supply chain even if we recklessly kept going the supply of parts, materials etc. sourced from other nations would still dry up fairly quickly and many things would stop anyway.

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i disagree.  What does recklessly have to do with anything!?! If there is demand, nobody knows if that is “reckless” or not. 5000 people buying up all the toilet paper available is not reckless?

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4 hours ago, Mendo said:

People act like if there were no quarantine orders, things would just continue on like nothing was happening. It's a false choice. The economy was going to tank regardless.

This. I think at this point we(and most everyone else)are F%^&$d.  

 

Only silver lining is maybe this meltdown will bring about some serious long term societal economic changes-maybe we won't have to have a revolution after all?

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Maybe it's time to start reviving Depression-era expressions?     When will we be living in Trumpvilles?   And flying Trump Flags?  

 

 

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I always felt like the economy was kind of falsely running hot, with all the "programs" and such. I mean, who really knows for sure, but the Trump Administration was pushing every button possible to make the stock market go, kind of like it's own bubble.

 

There has to be a "true" market in there somewhere.

 

Part of the problem with "running" hot is you basically are putting the pedal to the metal and you run out of gas. Or, you thought you were going to get to the "finish" line (maybe the 2020 elction?) with the gas you had left (being super risky in the macroeconomy), then a freaking landslide dropped into the middle of the road in your way, and you ran out of gas before the finish line. Now, you need a freaking helicopter rescue and demolition blast and it takes 3 months to get the road cleared again, and what you were risking all fell apart.

 

The "gas" in this case would be extremely low interest rates which encourage everyone from businesses to cities to individuals to borrow. Great for business! Horribly bad during a pandemic!

 

When the economy was humming super good, the Feds should have maybe rose interest rates. I understand, they probably thought this would keep going and it probalby would have, but this hit at one of the worst possible times.

 

If you rose interest rates then over time people would borrow less, rely more on cash reserves, it would slow the economy down but you could weather this storm MUCH better. But now, the bailouts are going to be massive and everything that was "gained" is now lost. 

 

Theoretically, it should bounce back quickly if this virus issue gets cleared up quickly... but seems like that isn't exactly going to be the case.

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Did we expect any different?   I personally am on the side of helping corporations, but making sure there are stringent measures put in place so that they actually use the money to retain workers during this crisis.  

 

The GOP's coronavirus relief package is a dream for big corporations and a nightmare for struggling Americans

 

https://www.businessinsider.com/coronavirus-pandemic-senate-gop-bill-doesnt-help-americans-workers-2020-3?fbclid=IwAR3Zmb2EfmaYlZO9Y0NGLD4dzK_Eb7hNLsT8oKVjwUqUMluiMOHE8TrK92E

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3 minutes ago, Cleburger said:

Did we expect any different?   I personally am on the side of helping corporations, but making sure there are stringent measures put in place so that they actually use the money to retain workers during this crisis.  

 

The GOP's coronavirus relief package is a dream for big corporations and a nightmare for struggling Americans

 

https://www.businessinsider.com/coronavirus-pandemic-senate-gop-bill-doesnt-help-americans-workers-2020-3?fbclid=IwAR3Zmb2EfmaYlZO9Y0NGLD4dzK_Eb7hNLsT8oKVjwUqUMluiMOHE8TrK92E

 

This should include:

-A provision against stock buybacks for X years

-Protections for workers (e.g., you can keep the money if you retain 90% of workers in the next two years)

-Unemployment benefits for independent contractors

 

Plus some others I'm probably blanking on at the moment.

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Very Stable Genius

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I’m amazed on the pushback over having conditions on the loans.  Like republicans aren’t even trying to hide the fact they want to simply enrich their donors.  
 

This needs to pass because workers and companies need that cash ASAP.  Just gotta bridge the next few months, get past this and get back on track.

 

I cannot wait to go to a bar or restaurant again.....

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8 hours ago, Ruken said:

I’m amazed on the pushback over having conditions on the loans.  Like republicans aren’t even trying to hide the fact they want to simply enrich their donors.  
 

This needs to pass because workers and companies need that cash ASAP.  Just gotta bridge the next few months, get past this and get back on track.

 

I cannot wait to go to a bar or restaurant again.....

 

Me too. My family eats out 5-10 times per week. My son is going to need a haircut big-time and the wife very much wants to hit the spa again. We will tip generously.

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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On ‎3‎/‎23‎/‎2020 at 11:06 AM, IAGuy39 said:

Theoretically, it should bounce back quickly if this virus issue gets cleared up quickly... but seems like that isn't exactly going to be the case.

 

The U.S.'s domestic activity will return more or less instantly since there will be no physical damage or loss of knowledge (short of a handful of places where key people are deceased) but there will be a lag around the world with our vendors and customers.  

 

All of the restaurant chatter is tiresome to me - Americans go to restaurants way too much.  People pay $40,000 to renovate their kitchens and then hardly cook with them.  

 

That said, I will definitely be out at the bar the night they reopen.  It's going to be wild.  

 

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10 minutes ago, jmecklenborg said:

The U.S.'s domestic activity will return more or less instantly since there will be no physical damage or loss of knowledge (short of a handful of places where key people are deceased) but there will be a lag around the world with our vendors and customers.  

 

The other key thing is to prevent layoffs. That could slow a recovery.

Edited by mu2010

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^If restaurants and other "non-essential" businesses remain closed for 90 ore more days, a lot of people will have moved and/or changed their plans, and so companies won't be able to rehire their former staffs entirely intact.  But that problem will resolve itself pretty quickly with the exception of seasonal businesses like amusement parks which might decide to simply not open at all for the season. 

 

I'm not sure what the training period is for a place like King's Island, but say it's 2 weeks.  If everyone is given the go-ahead on May 1 then I'd expect that they'll open May 15.  If it's June 1 they might not bother since a June 15 opening date means they've already missed 10+ weeks of business. 

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2 hours ago, jmecklenborg said:

 

The U.S.'s domestic activity will return more or less instantly since there will be no physical damage or loss of knowledge (short of a handful of places where key people are deceased) but there will be a lag around the world with our vendors and customers.  

 

All of the restaurant chatter is tiresome to me - Americans go to restaurants way too much.  People pay $40,000 to renovate their kitchens and then hardly cook with them.  

 

That said, I will definitely be out at the bar the night they reopen.  It's going to be wild.  

 

I think I said it in a group about retail, but it's worth repeating here. This will eliminate the weakest retailers and restaurants and help complete the rebalancing that's been long needed. America (in general) has far too much square-foot devoted to restaurants and retail than any other nation. Already, Neiman Marcus is considering Chapter 11, GNC is in deep trouble, and Party City and Jo-Ann have been downgraded. Those with strong omni-channel strategies will thrive and survive - Wal-Mart, Amazon, and Target are thriving, but Macy's, JCPenny and other mainstream retailers with weak online retail offerings will further weaken.

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I also wonder what impact it will have long-term with the car industry. There are projections that many smaller, independent car dealers won't survive, either closing up entirely or being bought by larger entities. And there is already a glut of car dealers, so it's another rebalancing that's long been needed.

 

Interestingly, I got a call from my local Subaru dealership offering me a 10% premium over Kelly's Blue Book for my 2016 Outback. They are offering a 63 month 0% offer for a new vehicle and while that's tempting, it'll be like hell getting financing for most people. Other car companies are offering loan payment deferrals, 0% APRs for years, and other incentives to prevent the car industry from collapsing entirely.

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My company started importing a lot of basic packaging materials from China about 15 years ago.  It grew from a container every few months to several containers per month.  We're now running low on this stuff and we and many others will have to switch to more expensive American suppliers (3M, etc.) who themselves might not be operating at full capacity, let alone have the ability to increase production.  

 

Many industries will be affected by situations like this over the next three months, but it is a very temporary situation that will resolve itself within 90 days, if not half that, as soon as everything resumes.  The precipitous stock market drop of the past two weeks was short-term people fleeing to cash.  As long as this doesn't turn into a protracted slog, there isn't going to be a multi-year recovery.  

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1 hour ago, TBideon said:

Force majeure. They'll be back.

This what I've been worried about all along. What happens to all of the landlords when they cant pay the mortgage? Seems like it could get ugly.

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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5 minutes ago, KJP said:

 

Makes complete sense with everyone ordering from home.   I understand that UPS/Fedex are hiring temp drivers now in excess of a normal Christmas season. 

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56 minutes ago, GCrites80s said:

Also a lot of stuff was in the "wrong place" for what's going on now.

 

That's basically the reason toilet paper is so hard to get right now.  Even without hoarding, the demand for consumer TP has still nearly doubled with so many people staying home.  The consumer brands had been producing at near capacity already, since there was steady demand and it's a commodity good, so there's little room for overhead and idle production facilities.  The suppliers of TP for commercial uses, like schools, offices, hotels, restaurants, stores, etc. can't just shift their production line and supply chain since they use different raw materials and production facilities.  Even if you as a consumer want to buy some 12" diameter rolls of commercial TP, they're set up to be moved on pallets using completely different sales, shipping, and delivery logistics.  

 

It's a similar case for the foods that are in short supply.  With so many restaurants running on fumes at best, their commercial suppliers can't just turn around and dump a two dozen 50lb sacks of flour on Kroger's loading dock.  I heard once that many of the local Thai restaurants buy their spring roles pre-made from the same supplier (Jungle Jim's?  Do they have a wholesale restaurant supply division?) and they just deep fry them at the restaurant.  It's a rather esoteric example sure, but imagine trying to redirect that supply to the direct-to-consumer market.  "Sure I can deliver you 10 gross of frozen spring rolls, what's your account number and tax ID?"  

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