Recession Coming?

*zap*

WKR
Joined
Dec 20, 2018
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N/E Kansas
You folks trust what the fed says? You trust the figures given out by government or allied with government companies? Time to get a vax (or 3) and wear two masks still?
What will be the result of this years st petersburgh forum? Not much talk about that on western media is there? It is only a few weeks away and I hear 80 countries attending.....
 
Joined
Sep 2, 2015
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About the only true trust I have is in the Lord, knowing that all things work to the greater good of those He loves and to whom He has called.

As to things of this world, I absorb the input/ opinions of many on both sides of the issues, do my best to look at past trends and what history might tell us, and spend a lot of time praying. At the end of all that I do the best I can to form an educated opinion with the intent to live the best life I can and do well the tasks to which I have been called.

What I fight everyday is my propensity to be negative, have a severe level of distrust in all things but myself, and I'm constantly in a battle of illusion of what I control in this world (hint, absolutely nothing more than what I think, feel, and do as a reaction to the world around me).

I've found living in fear of what might happen certainly robs myself and many others around me of a lot of joy. Being afraid of the future and that it might not go the way I want has been a quick way to poor health in all aspects. That's different than understanding the reality of the world as it is and the trends that are developing and having a plan to control only what i can control and accepting all other things as simply the way things are and doing what i can to influence them in positive ways in the circles i have influence. One is fearful life, the other i consider cautious optimisim.

Thinking through the issues, being prepared in the best way I am able, and then rolling with the punches has been my best life battle plan so far.

Your mileage may vary.
 
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Timberline
You folks trust what the fed says? You trust the figures given out by government or allied with government companies? Time to get a vax (or 3) and wear two masks still?
What will be the result of this years st petersburgh forum? Not much talk about that on western media is there? It is only a few weeks away and I hear 80 countries attending.....

If the fed (or state) says it, do the exact opposite. Politicians are usually those that couldn't cut it in the real world.
 
Joined
Nov 16, 2022
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The only think I know at this point is this:

I bought a sawmill and lumber prices have dropped dramatically to the point that its hardly worth running the mill.

I built a chicken coop and got 24 chickens and now egg prices have dropped to a price cheaper than I can feed these chickens.

Figures. lol

Maybe I should pretend to build a vehicle. The bottom would for sure drop out of vehicle sales!? lol
I am curious about what timber market you are in. I am a forester in Wyoming, our market is HOT and I can't sustainably sell enough wood to keep our mills happy. We have a lady with a firewood business that paid $1600 for a load of sawlogs to be used as firewood last week. Stumpage bids have been well above the minimum price since 2020.
 

Gobbler36

WKR
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Dec 6, 2015
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Idaho
I work in a very large industry thats very good ole boys at the top and I imagine has insider trading.

We went from basically 2.5 yrs of unlimited spending.
To shut it down entirely. Don't buy anything without permission. Minimum to just get buy.
Budget Budget budget.

I thought it was my work group.
But its company wide.

I think this winter will be harsh.

Last time we heard it like this. Was 2008
Same here I work for a large manufacturer in textiles that is very dependent on housing segment and our management company wide is trying to pinch every penny and every credit, accommodation and discount is being scrutinized right now heavily. my company spends big money on financial advisors, etc and I believe they are predicting a not so great outlook based on our positioning right now
 

Beendare

WKR
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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.

Good points Matt…but it makes sense…with only a small % of people going back to the office in the liberal state of CA ( its much different across the country) why loan to an office building that can lose 70% of its value. The whole lending market has gotten riskier.

My CRE buddy told me That $300m building on California street auctioned for $69m.

Warehouse and industrial space is still doing well…but office has tanked.
 
OP
O
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Portland, OR
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?
I have some good friends in the construction industry (both commercial and residential). They have slowed down but not to a halt. They said it's because the market is normalizing rather than they sky-high prices of their construction materials and contractor rates the past 2 years. The next couple of months should be interesting to watch.

I don't staff for the IT industry but have friends that do. For years, our software and IT services companies locally couldn't hire people fast enough and were paying out the nose in wages. I think it's finally coming to a head, and they aren't seeing the ROI of all that high spending/hiring.
 
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I have some good friends in the construction industry (both commercial and residential). They have slowed down but not to a halt. They said it's because the market is normalizing rather than they sky-high prices of their construction materials and contractor rates the past 2 years. The next couple of months should be interesting to watch.
I'm a PM for wet utilities. There is an incredible amount of money sitting on local gov't books in the form of ARPA Funds. Municipal utility work is absolutely on fire, but there are cracks starting to show on the private side of development. Pipe contractors who wouldn't give you the time of day are all of a sudden hitting slow spots.
 

CorbLand

WKR
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Mar 16, 2016
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Construction in my area doesnt seem to have slowed down a ton. Less houses going up but still plenty being built. Father in law does concrete and has more work than he can handle. Started a job managing budgets for construction for a state entity a couple months ago and we are struggling to get contractors on some projects.
 
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I am curious about what timber market you are in. I am a forester in Wyoming, our market is HOT and I can't sustainably sell enough wood to keep our mills happy. We have a lady with a firewood business that paid $1600 for a load of sawlogs to be used as firewood last week. Stumpage bids have been well above the minimum price since 2020.


Oh hell, I don't do it to make money. lol I bought a little sawmill to save on money for projects around the house.

I should do it to make some side scratch though. I would saw up someone's logs if they brought them here.
 

MattB

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Good points Matt…but it makes sense…with only a small % of people going back to the office in the liberal state of CA ( its much different across the country) why loan to an office building that can lose 70% of its value. The whole lending market has gotten riskier.

My CRE buddy told me That $300m building on California street auctioned for $69m.

Warehouse and industrial space is still doing well…but office has tanked.
My sense is the vacancy related to WFH is tied more to industry than politics. In CA the vacancy is largely tied to technology companies. The same phenomenon is being seen in other tech centers, even in conservative states like TX.


EDIT: I tried and failed to find an article I read yesterday on this. There was a PE guy who had a retort to Musk’s call for tech workers to head back to the office. This guy had ownership in something like 45 companies and was loving how WFH has allowed his companies to pare down their real estate needs and lease expense. He made a comment that had materially increased the free cash flow from his investment portfolio.
 
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I drive through minneapolis /st paul . Vacant commercial office high rises all over the place . Probably due to the "work at home" sydrome . Wonder if a guy with a "little" pocket change could get a steal on one and start a business retrofitting them for apartments . Would it be cost effective ? You could squeeze alot of renters in one of those buildings . Above mentioned 300 million dollar building for 69 million . Im sure someone else has thought of this
 

MattB

WKR
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I drive through minneapolis /st paul . Vacant commercial office high rises all over the place . Probably due to the "work at home" sydrome . Wonder if a guy with a "little" pocket change could get a steal on one and start a business retrofitting them for apartments . Would it be cost effective ? You could squeeze alot of renters in one of those buildings . Above mentioned 300 million dollar building for 69 million . Im sure someone else has thought of this
I talked to a couple of buddies in the trades about this the other night, and they were of the opinion that newer building are really hard to reconfigure due to how they were built. Very hard to add\move plumbing apparently.

They though older buildings may have a design that would make them more flexible.
 
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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.

To help you out, a recession is a downturn or decrease in economic activity. Yes, a recession is affected by an industry just as an industry is affected by a recession. Some industries boom while others bust in the same timeframe. Those industries experience a recession within its scope in a bust cycle.
 
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Commercial construction has definitely slowed a bit in Seattle. The last 5 years it's been booming and GC's/subs were being picky with new work. Now everyone is bidding everything and expanding their search range for new work substantially.
 

307

WKR
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EDIT: I tried and failed to find an article I read yesterday on this. There was a PE guy who had a retort to Musk’s call for tech workers to head back to the office. This guy had ownership in something like 45 companies and was loving how WFH has allowed his companies to pare down their real estate needs and lease expense. He made a comment that had materially increased the free cash flow from his investment portfolio.

Kevin O'Leary

 
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I'm confused by the disdain people have for folks working from home. We have all sorts of industries and people that it makes sense for. Millions of Americans have recalibrated their priorities after 2020. A good part of the labor shortage is because the covid era made them realize more time with family was more important than time at work, commuting, or OT to keep a boss happy that would replace you in a blink of an eye. Moms and Dads spending more time at home and less time chasing the material is a big win for American values. Work from home allows for part time work and a much more manageable work/life balance that most crave. Most companies that offer work from home have stringent task tracking, and with the implementation of Teams, there's far greater accountability than pre-2020. I talk with my supervisor 10x more than I did when in the office. It's better for families, family budgets, corporate budgets, the environment, and hopefully eventually cuts back on urban sprawl.

On a somewhat related note, I tried to get a small vehicle loan this morning on a smoking deal I found last night. Called 7 different local credit unions trying to give them my money. Probably totaled 50+ phone calls from 10am to 2pm. Never did have a human pick up on the other end. Sometime around 2PM I finally got a call back from 1/7. Still have not heard back from the other 6 and don't presume I will. So for all them laid off tech people, there are also a pile of bank jobs waiting in Wasilla, AK to go along with everything else! Maybe if they opened up work from home for reception and loan officers that would attract some employees......
 
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