6 ms·

I just don't buy it. Everything is in limbo, house inventory is very low because no one sells their low interest mortgage. Commercial real estate is going to bl

I just don't buy it. Everything is in limbo, house inventory is very low because no one sells their low interest mortgage. Commercial real estate is going to blow up any day. The stock market is buoyed by a few companies in AI craze. Startups are getting a lot less funding than before. Barely any IPOs in sight. Large investments are made by governments on borrowed money. It seems to me that the only way things aren't awful, is because people are holding on for dear life and minimizing their burn rate. But the wall is coming, just very slowly. That's just my impression, I'm not an expert. I would prefer being wrong.

gochi 3y ago
I too would prefer being wrong, and I have a hard time reconciling the common position during the mass layoffs that they were aware of what's coming, yet simultaneously everything is perfectly fine. If companies were wrong, shouldn't that be a gigantic concern they got away with laying off hundreds of thousands for no reason? If they're right, then articles trying to convince us everything is fine is surely alarming!
- GoodJokes 3y ago
  [dead]
- 0xDEF 3y ago
  American Big Tech companies laying off highly paid specialized tech workers doesn't say much about the rest of the economy. We already knew that most of the Big Tech companies are houses of cards built around one core profitable business like Google's Ad business. The rest of society has no problem finding jobs. The problem is that almost no jobs pay enough to buy housing in places millennials and Gen Z consider desirable.
  - 88913527 3y ago
    The top quintile makes up a disproportionate portion of total consumption, so 1 laid off high-earning worker can have more second-order effects than 1 laid off middle-quintile earner.
    - lotsofpulp 3y ago
      Maybe. Or more people in the bottom quintile earned more, and hence were able to consume more (in aggregate) to offset the few in the top quintile that are consuming less.
    - dragonwriter 3y ago
      > The top quintile makes up a disproportionate portion of total consumption, They also have mich bigger savings cushions on average and can go through disruptions with little change to consumption.
  - red-iron-pine 3y ago
    The problem is that finding those jobs is hard, unless you live somewhere very expensive. I could afford a house, easily, in Rural Kentucky, but good luck getting a job around there. Remote might change that game a little, but not as much as you'd think, and there would always be a huge sword of damocles dangling over your head about job security.
- benterix 3y ago
  This was discussed in many threads during these layoffs. Specifically, people were upset that several companies were overhiring during the pandemic being overoptimistic on shaky grounds. But in spite of layoffs most of these headcounts remained higher than before the pandemic. My take: everybody wants to foretell the future, and people on the two extremes are the most visible. Whereas in fact the present is so-so, not terrible, not excellent.
ArnoVW 3y ago
This time could be different of course, but there is a definite boom/bust business cycle. At least that is my impression after 50 years on this earth, and general study of history. Generally the bust lasts 2 years, so if you can stretch it until then there is a good chance you'll make it. Of course, that's not a guarantee. Some parts of the economy simply never recover, because their fundamentals have changed.
brianwawok 3y ago
> house inventory is very low because no one sells their low interest mortgage. Short term yes. I would 100% delay moving to a 2 bedroom bigger house and just make do with a slightly smaller house to avoid a 25% more expensive house having a 100% higher mortgage payment. But if interest rates stay up for 2, 3, 5 years - more and more of those want to moves will just suck it up and do it.
- taeric 3y ago
  I would think the idea is that if the rates stay up, prices should eventually come down a bit to help bump people into moving? Is that not the idea?
  - Ekaros 3y ago
    The monthly payment is important one. Not the price... So either the wages have to go up or the property prices go down. Or mortages extend an other 10 or 20 years.
  - brianwawok 3y ago
    That is the idea yes. Over the long term everything converges to monthly payment. If someone has $1000 to spend on a house - they ultimately don't care if its a $300,000 house with a 2% APR loan, or a $200,000 house with a 10% APR loan (math made up and not exactly correct). The problem is people are very very happy when they can make some cash off a move. People are very very sad when they are underwater. To all the people that paid $250-$275k for the house above? They are going to delay for a very long time before they sell for 200k. Likely long enough that inflation will slowly bring up the value. People are very emotional about this and do not make wise economic decisions. For example - the finances of the time may mean that the house they are both selling and buying are 30% down. But it's a real feel bad, and losing money in a house is enough to stop many people from moving. a 30% gain where the seller both makes money on their sale AND ends up paying way more in total? It feels good and people jump on that instantly. (And the way down payments work, its generally easier for someone with limited liquid assets to to the sell + buy when the market is up 30%, vs when the market is down 30%).
Ekaros 3y ago
Not to forget the rating downgrade for USA loans... I don't think we have seen much yet, whatever the bulls say. It might take time to come, but I think we will see something pretty big eventually.
warent 3y ago
This is the worst of it. My partner and I want to buy our first house but the market feels perpetually in limbo and it feels like there's no clarification or end of the tunnel in sight. It feels like horrible timing, but then again they also say you can't time the market so maybe we just buy now. Millennials are getting nonstop shit on, ugh
qbasic_forever 3y ago
Everything is ratcheting down a notch and the 'premium consumers' are driving all of the economy right now. We don't see contraction in overall spending because when someone suddenly is too poor to afford stuff the richer people above them are also getting poorer and changing their spending habits to pick up the slack. Walmart has noticed this and called it out in their earnings reports IIRC--they see richer people are frequenting their stores and spending more money which is making up for the poorer people that can't afford to shop at even Walmart anymore. So you have the incredibly wealthy people that have actually gained massively as they've been able to gamble on the market in the short term--they aren't changing any habits. But the folks just below them who previously might have bought his and her matching Teslas without a second thought are now looking at their slightly diminished wealth and deciding maybe we settle for just one new Chevy Volt for now. They're pulling up the slack for the former Volt buyers who are now looking at their shrinking savings and deciding, no new Volt this year we're going to get a 3 year old used car. You can follow this ratcheting down all the way to the very bottom level where unfortunately the poorest/lowest levels are just being completely written out and dropped from the economy entirely. The big picture looks like nothing is wrong but the composition of who is spending is changing a lot.
- the_only_law 3y ago
  > Walmart has noticed this and called it out in their earnings reports IIRC Is there a link to this I can read somewhere? I’d be curious to see their analysis.
  - qbasic_forever 3y ago
    https://www.businessinsider.com/walmart-retains-wealthy-customers-thanks-to-inflation-low-grocery-prices-2023-5 https://www.businessinsider.com/walmart-retains-wealthy-cust...
    - AYBABTME 3y ago
      How do they know the income of their shoppers? I'm very curious of the technique they use to come to this conclusion. Although I can guess of some methods they might have available.
GoodJokes 3y ago
[dead]
throw1234651234 3y ago
This is anecdotal, but a lot of my peers who graduated around 2009 are living way below their means because they know it's realistic to be hit by a major stock market drop along with losing their job, which might not be recovered for months, if not years. So it truly could be a "delayed" effect where a lot of the upper middle class can ride it out 6 months - 2 years, but then it really hits.

gochi 3y ago

I too would prefer being wrong, and I have a hard time reconciling the common position during the mass layoffs that they were aware of what's coming, yet simultaneously everything is perfectly fine. If companies were wrong, shouldn't that be a gigantic concern they got away with laying off hundreds of thousands for no reason? If they're right, then articles trying to convince us everything is fine is surely alarming!

GoodJokes 3y ago
[dead]
0xDEF 3y ago
American Big Tech companies laying off highly paid specialized tech workers doesn't say much about the rest of the economy. We already knew that most of the Big Tech companies are houses of cards built around one core profitable business like Google's Ad business. The rest of society has no problem finding jobs. The problem is that almost no jobs pay enough to buy housing in places millennials and Gen Z consider desirable.
- 88913527 3y ago
  The top quintile makes up a disproportionate portion of total consumption, so 1 laid off high-earning worker can have more second-order effects than 1 laid off middle-quintile earner.
  - lotsofpulp 3y ago
    Maybe. Or more people in the bottom quintile earned more, and hence were able to consume more (in aggregate) to offset the few in the top quintile that are consuming less.
  - dragonwriter 3y ago
    > The top quintile makes up a disproportionate portion of total consumption, They also have mich bigger savings cushions on average and can go through disruptions with little change to consumption.
- red-iron-pine 3y ago
  The problem is that finding those jobs is hard, unless you live somewhere very expensive. I could afford a house, easily, in Rural Kentucky, but good luck getting a job around there. Remote might change that game a little, but not as much as you'd think, and there would always be a huge sword of damocles dangling over your head about job security.
benterix 3y ago
This was discussed in many threads during these layoffs. Specifically, people were upset that several companies were overhiring during the pandemic being overoptimistic on shaky grounds. But in spite of layoffs most of these headcounts remained higher than before the pandemic. My take: everybody wants to foretell the future, and people on the two extremes are the most visible. Whereas in fact the present is so-so, not terrible, not excellent.

ArnoVW 3y ago

This time could be different of course, but there is a definite boom/bust business cycle. At least that is my impression after 50 years on this earth, and general study of history. Generally the bust lasts 2 years, so if you can stretch it until then there is a good chance you'll make it. Of course, that's not a guarantee. Some parts of the economy simply never recover, because their fundamentals have changed.

brianwawok 3y ago

> house inventory is very low because no one sells their low interest mortgage. Short term yes. I would 100% delay moving to a 2 bedroom bigger house and just make do with a slightly smaller house to avoid a 25% more expensive house having a 100% higher mortgage payment. But if interest rates stay up for 2, 3, 5 years - more and more of those want to moves will just suck it up and do it.

taeric 3y ago
I would think the idea is that if the rates stay up, prices should eventually come down a bit to help bump people into moving? Is that not the idea?
- Ekaros 3y ago
  The monthly payment is important one. Not the price... So either the wages have to go up or the property prices go down. Or mortages extend an other 10 or 20 years.
- brianwawok 3y ago
  That is the idea yes. Over the long term everything converges to monthly payment. If someone has $1000 to spend on a house - they ultimately don't care if its a $300,000 house with a 2% APR loan, or a $200,000 house with a 10% APR loan (math made up and not exactly correct). The problem is people are very very happy when they can make some cash off a move. People are very very sad when they are underwater. To all the people that paid $250-$275k for the house above? They are going to delay for a very long time before they sell for 200k. Likely long enough that inflation will slowly bring up the value. People are very emotional about this and do not make wise economic decisions. For example - the finances of the time may mean that the house they are both selling and buying are 30% down. But it's a real feel bad, and losing money in a house is enough to stop many people from moving. a 30% gain where the seller both makes money on their sale AND ends up paying way more in total? It feels good and people jump on that instantly. (And the way down payments work, its generally easier for someone with limited liquid assets to to the sell + buy when the market is up 30%, vs when the market is down 30%).

Ekaros 3y ago

Not to forget the rating downgrade for USA loans... I don't think we have seen much yet, whatever the bulls say. It might take time to come, but I think we will see something pretty big eventually.

warent 3y ago

This is the worst of it. My partner and I want to buy our first house but the market feels perpetually in limbo and it feels like there's no clarification or end of the tunnel in sight. It feels like horrible timing, but then again they also say you can't time the market so maybe we just buy now. Millennials are getting nonstop shit on, ugh

qbasic_forever 3y ago

Everything is ratcheting down a notch and the 'premium consumers' are driving all of the economy right now. We don't see contraction in overall spending because when someone suddenly is too poor to afford stuff the richer people above them are also getting poorer and changing their spending habits to pick up the slack. Walmart has noticed this and called it out in their earnings reports IIRC--they see richer people are frequenting their stores and spending more money which is making up for the poorer people that can't afford to shop at even Walmart anymore. So you have the incredibly wealthy people that have actually gained massively as they've been able to gamble on the market in the short term--they aren't changing any habits. But the folks just below them who previously might have bought his and her matching Teslas without a second thought are now looking at their slightly diminished wealth and deciding maybe we settle for just one new Chevy Volt for now. They're pulling up the slack for the former Volt buyers who are now looking at their shrinking savings and deciding, no new Volt this year we're going to get a 3 year old used car. You can follow this ratcheting down all the way to the very bottom level where unfortunately the poorest/lowest levels are just being completely written out and dropped from the economy entirely. The big picture looks like nothing is wrong but the composition of who is spending is changing a lot.

the_only_law 3y ago
> Walmart has noticed this and called it out in their earnings reports IIRC Is there a link to this I can read somewhere? I’d be curious to see their analysis.
- qbasic_forever 3y ago
  https://www.businessinsider.com/walmart-retains-wealthy-customers-thanks-to-inflation-low-grocery-prices-2023-5 https://www.businessinsider.com/walmart-retains-wealthy-cust...
  - AYBABTME 3y ago
    How do they know the income of their shoppers? I'm very curious of the technique they use to come to this conclusion. Although I can guess of some methods they might have available.

GoodJokes 3y ago

[dead]

throw1234651234 3y ago

This is anecdotal, but a lot of my peers who graduated around 2009 are living way below their means because they know it's realistic to be hit by a major stock market drop along with losing their job, which might not be recovered for months, if not years. So it truly could be a "delayed" effect where a lot of the upper middle class can ride it out 6 months - 2 years, but then it really hits.