Recession Coming?

[woods89]

I'm a partner in a residential remodeling business, admittedly a small fish in a small pond. Our work is booming, though, and we can't keep our backlog under 5-6 months. Real estate is slowing down in my area, and I think we will see new construction back off to a certain extent.

My rates are way higher today than they were 3 or 4 years ago, because we are getting hammered on the expense front. Looking at the average age of guys in and out of my local lumberyard, don't expect cheap construction labor for awhile.

 

[tjmitchell]

Ford announced today they are loosing billions and gonna lay off big time.Especially on electric vehicles.

 

[roadrunner]

A recession doesn’t depend on the industry, some industries are just, by nature, more “recession proof” and won’t see quite the downturn as others.

Unless you work for the MIC, there was certainly a downturn coming for them after AFG, but they made sure they’ve got their new cash cow. Safe to say they won’t feel a thing in a recession.

What is a recession triggered by?

 

[fngTony]

No slowdown in hiring here (collision repair). That whole industry is short staffed, maybe some of the out of work tech people will come over.

 

[Dos XX]

Ford announced today they are loosing billions and gonna lay off big time.Especially on electric vehicles.

Can you provide a link to that announcement? I can't find it. I might be searching for the wrong thing, though.

 

[Beendare]

My businesses are booming...but are pretty inflation proof.

I think the question begs the answer;

Its time to be smart with your money...don't over spend..and don't be over leveraged.

If only the supposed banking experts did that- grin

 

[jayhawk]

Everybody is hiring here. However, when you look into most of the "now hiring" signs, you'll find they want to hire someone with 10yrs experience and a bachelors degree, but only pay them $15/hr. Forget that. No one can live on that when rent has nearly doubled in the last 3 yrs.

 

[SCHUNTER73]

I sell building materials to high end custom residential builders in coastal South Carolina. Business opportunities are unreal. We have been the benefactors of many people fleeing larger cities/metropolitan areas for places they want to live, rather than where the “had” to live for work.

 

[sacklunch]

What is a recession triggered by?

That depends, could be many factors, could be just one. But to say it depends on the industry is not accurate, if you are referencing a US economic recession. Unless your industry is somehow operating free of anything tying it to the economy, the dolllar, etc. some industries are more isolated than others from the downturn, but that doesn’t mean a recession is industry specific.

 

[MattB]

Its time to be smart with your money...don't over spend..and don't be over leveraged.

If only the supposed banking experts did that- grin

I had coffee with one of my old bosses last month, and you would be shocked at just how selective the industry has become following the FED rate hikes, the SVB/FRB implosions, and local commercial real estate trends. The lending bar has been raised to a point that we didn't even see in 2009-2011 for commercial real estate loans in terms of the required relationship tenor, loan size, and loan-to-value ratio. I was frankly shocked as it seems like they will be burning bridges with some long-standing but non-strategic clients, but those are the marching orders. But bad policy coupled with WFH is absolutely crushing the CRE markets in the Bay Area.

Here is a link to an article that discusses how one class-A office building in SF that was purchased for $300M may sell for as little as $60M. When I was doing loans on that sort of property, we could loan up to 70% LTV presuming the property could service the debt 1.25x. With that, a bank could have lent $210M against a property that may only be worth $60M.

A San Francisco office building was worth $300 million before the pandemic. Now, it could sell for only $60 million — a perfect example of why downtowns are in trouble

Buyers will start bidding soon for the 22-story office tower that sits at 350 California Street which runs through San Francisco's financial district.

www.businessinsider.com

 

[MattB]

Zap is Hunter Biden

Adulting is hard.

 

[woods89]

I sell building materials to high end custom residential builders in coastal South Carolina. Business opportunities are unreal. We have been the benefactors of many people fleeing larger cities/metropolitan areas for places they want to live, rather than where the “had” to live for work.

Same here in south central MO. Lots of folks have moved in, they have cash, and they want to upgrade the inexpensive (to them) homes they've purchased.

 

[GSPHUNTER]

This should be titled, Recession continues.

 

[roadrunner]

That depends, could be many factors, could be just one. But to say it depends on the industry is not accurate, if you are referencing a US economic recession. Unless your industry is somehow operating free of anything tying it to the economy, the dolllar, etc. some industries are more isolated than others from the downturn, but that doesn’t mean a recession is industry specific.

Name an industry that drives all the others. If that industry declines as a whole, what happens to all the others?

Hint: everybody is dependent on it, including "renewables".

 

[Lou (Louis)]

Name an industry that drives all the others. If that industry declines as a whole, what happens to all the others?

Hint: everybody is dependent on it, including "renewables".

Prostitution?

 

[thatguyoverthere]

Wait... haven't we been in a recession for two years?

exactly... they just keep shifting the goal post / changing the definition of recession...

 

[Rob5589]

Wife and I work in medical, busier than ever, way short staffed. 3 houses on our street sold recently, ave about 15 dom at or over asking. I'm part owner of a family home that is in process of being sold at 47k over asking, in Hesperia CA. But our 401k's are pretty stagnant as are our investments. But we're still buying. Gas and groceries still way up.

 

[Tahoe1305]

Is it bad I’m hoping for default as a trigger to crash (just a bit). Personally tired of how overpriced everything is. Most importantly vehicles and homes. But really it’s most things since Covid.

Think a nice pre Covid reset (of almost 30-40% from current) would be awesome. Not like the markets been good since Covid either. Maybe that will get out of funk too.

 

[Sherman]

I work in procurement....
about a year ago everyone was saying a recession was coming as orders were not increasing (Im summarizing).
1. This reduction was mainly caused by the moderating of shipment lead times and increased on time rates by the carriers. Companies/Manufacturers didn't need as much inventory and slowed their ordering to draw down on hand inventories.

I work in the electrical utilitiy industry, before covid you could order a very large transformer and get it in about two-three years max. Nowadays certain manufacturers are no longer accepting orders as their capacity for the next 6-7 years is full and entities are still trying or order more.

I have a hard time seeing a real recession in the next year but I do see things slowing down. Home building has been slowing but look at the material and wage cost pressure all companies are seeing. Its not as cheap these days to build a house (however its almost always more expensive than thought).

@OregonSteeler (I live outside of the PDX Metro),
Have you through about the potential that the slowdown in IT staffing is a result of the layoffs happening across the IT services sector (bookface/google/twitter/etc) rather than the general economy?

Yep. I work for a major utility and we hired a crew to rebuild transformers and other equipment to send back into the field. They used to just ship the bad ones out.

 

[insanelupus]

Listening to Ramsey, Rob West, & Clark Howard, projections don't seem as dire as many have forecast. My (extremely amateur) understanding is that historically, in all but 1 2-year bear market, the year following has had significant gains. The fed rate hike is having the fed desire of slowing the economy. The unemployment rate is off (low) but mostly due to how many who have voluntarily quit placing themselves in the job market, and if accounted for, like previous years, would indicate higher unemployment. The debt ceiling will get kicked down the road again, eventually, after political huffing and puffing. Some are arguing it is now pointless and creates more woes than value as it is now arbitrary and not utilized correctly. Bank failures are less an indication of poor economy and more a product of poor management and lack of diversifying (especially SVB) and that the vast majority of banks managing correctly are secure.


The fellas I mention above seem quite confident (despite past definition changes) that a recession is coming, likely by the end of the year or first part of next, but it will be short lived, likely not a bad as anticipated initially, and an excellent time to invest in the markets when they are on sale.


They've made a living being smarter on this stuff than I, and have a much better track record than I with financials, as well as a balanced common sense approach.


I just listen and try to learn from the information i can find and do the best i can to not pay too much heed to the extremes on either side warning of falling skies, but what do i know?!