Gradually then Suddenly- Is Suddenly almost here?
1123 sats \ 23 comments \ @grayruby 25 Apr econ
"How did you go bankrupt?" Bill asked. "Two ways" Mike said. "Gradually, and then suddenly."- from Ernest Hemingway's novel The Sun Also Rises.
I have been somewhat shocked by the resiliency of the economy. During the mini banking crisis last March, I thought surely a recession was around the corner. Maybe it still is but the corner seems a farther walk than I expected.
You may have seen the surprising US GDP figures released this morning. 1.6% annualized vs projected 2.4% and with the backdrop of a clearly already understated 3.4% annualized inflation rate. Not good. Add in US deficit spending rolling like a runaway train and debt service cost skyrocketing, it seems like suddenly which hasn't been coming suddenly might be approaching, well suddenly.
Economic data in Canada has certainly been more sluggish than the US for awhile now. The maybe it's just "a gully" (IYKYK) crowd have been out in full force for months. I don't want to make too much of personal anecdotes but I have personally seen a number of dominoes in my circle falling recently that has me wondering if Canada is about to hit a brick wall.
  • Heard two of my former customers, from when I had my business, have filed for bankruptcy
  • My former business partner mentioned a high profile customer (billion dollar plus Canadian company) is 9 months past due on roughly $60,000 they owe him. Ruh Roh.
  • The company my wife works for just announced they will be closing 5 of their 15 locations.
  • A local small business I know that distributes supplies and equipment to local restaurants and retail are downsizing from 2 locations to 1.
  • A family friend in town told me today that he might be losing his job managing multiple properties due to his company struggling and restructuring.
  • I previously posted about Commercial Real Estate in Canada's biggest city Toronto (primarily office and retail) struggling drastically with occupancy rates at multi decade lows.
This has me concerned things in Canada are barreling towards the Suddenly phase of economic calamity and the US GDP figures from this morning have me wondering if that's the US I see coming in hot in our rearview mirror.
Cheers, GR
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196 sats \ 6 replies \ @Undisciplined 25 Apr
This reminds me of a hypothesis one of my colleagues ran past me: he called it a conspiracy theory, which it technically is.
The federal government is starting to make remote workers return to their offices. Ostensibly, this is about productivity, but neither of us believe they care about that very much.
He was proposing that this was happening to prop up commercial real estate demand (maybe just for select property owners). It makes so much sense, that I'm sure it's at least partly correct.
Desperate measures like this are generally a sign that things are about to go south.
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181 sats \ 0 replies \ @windward 25 Apr
He was proposing that this was happening to prop up commercial real estate demand
Your colleague is right.
Unlike residential real estate, commercial real estate rental leases last years. And after lockdown, loads of businesses are either realizing they don't need as much office space or can't afford it. Businesses are not renewing leases.
Zoning laws in the US make it prohibitively expensive to repurpose the building for something else - say, apartment/mixed living.
And the landlords don't necessarily own the building.
To quote the NPR article above:
If office landlords can't make good on their loans and ultimately hand over the keys, banks would need to find new buyers, a tough task when interest rates are high, credit is tightening and concerns about the economy grow.
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98 sats \ 0 replies \ @Satosora 25 Apr
I have also heard about this. Because of the empty buildings, the landlords are taking issues up to their representitives to get everyone back in the offices.
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88 sats \ 1 reply \ @kytt 26 Apr
And the immigrants flooding our borders are propping up residential real estate demand, especially where they are paying homeowners to house them.
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41 sats \ 0 replies \ @Undisciplined 26 Apr
If someone squats in your house you have to keep paying the mortgage, plus you have to find another place for you to live.
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68 sats \ 0 replies \ @grayruby OP 25 Apr
I will say this. I don't think it is a coincidence that the big banks were the first of the public companies pushing back to the office.
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37 sats \ 0 replies \ @nym 25 Apr
Great point. I haven't thought of that angle...a little collusion or something.
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134 sats \ 2 replies \ @siggy47 25 Apr
I think this morning's GDP and inflation numbers caused a bit of a tremor in the US. I was listening to Bloomberg Radio. They are 100 percent behind keeping up the illusion that the economy is great to ensure Biden's reelection, but they were grasping at straws this morning. Maybe it was my imagination, but they seemed to be aware for the first time that people weren't buying their bullshit.
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108 sats \ 1 reply \ @grayruby OP 25 Apr
It's funny you mention that. I had to drive my mom to a doctor's appointment out of town today and I was joking with my dad something to the effect that media and government keeping bullshitting everyone and seem shocked by the fact no one trusts them. So, I said "maybe stop lying to people. It's like asking why is this dog I beat every day not coming to me."
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50 sats \ 0 replies \ @Satosora 25 Apr
I said the same thing to my folks. They were listening to music, and l asked why they dont listen to the news anymore. I remember when the radio would be on the whole day on low. They were like, whats the point of listening to that garbage?
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50 sats \ 1 reply \ @Satosora 25 Apr
This is heavy, but just because a company is downsizing doesnt mean it is going bankrupt. Restructuring is important for anything. Etfs restructure and reallocate all the time. Some companies expand too quickly during good times and cant manage during hard times. Building a foundations is important for any business.
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0 sats \ 0 replies \ @grayruby OP 25 Apr
Totally agree. Just noting the series of things I have heard like pieces in a puzzle.
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50 sats \ 1 reply \ @Reign 25 Apr
What type of business did you run? (If you don’t mind me asking)
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30 sats \ 0 replies \ @grayruby OP 25 Apr
We provided various maintenance and management services for commercial properties.
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50 sats \ 6 replies \ @026180d3a3 25 Apr
More likely Britain although the US has plenty of inflation.
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10 sats \ 5 replies \ @grayruby OP 25 Apr
The race is on.
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50 sats \ 4 replies \ @026180d3a3 25 Apr
First prize gets a burning barrel and plenty of currency to stay warm with.
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70 sats \ 3 replies \ @jshagenow4 25 Apr
It was certainly an "eye opener" here when I saw that GDP number.... I have been wondering just how long the FED/Treasury dance could go on before they both ended up cornered with no way out.
They will almost certainly devise some new "program" that obfuscates their tangled feet for a moment or three...but this certainly feels like the beginning of some very tough times for the world.
Just this morning I was watching this clip someone on my LinkedIn posted and the guest was speaking of the "upcoming bloom" and I about spit out my coffee...
https://lnkd.in/eCnaUN_R
I just am not nearly this opptimistic about the coming months or even years - 34.6 Trillion and counting in US Debt seems insurmountable....We will have to work very hard and very quickly to social engineer a way out of that!
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31 sats \ 0 replies \ @026180d3a3 25 Apr
Sometimes the bloom is a corpse flower...
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52 sats \ 1 reply \ @grayruby OP 25 Apr
We know the playbook. As soon as the ground shakes beneath the economy the printers will fire up.
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20 sats \ 0 replies \ @026180d3a3 25 Apr
Where there is a will...
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40 sats \ 1 reply \ @Signal312 25 Apr
I'll give you one more. I get a regular job email. It used to give all kinds of jobs that were very relevant to me (they had a relevance rating, it was usually above 95% based on my skill set).
In the past month, I think they're scraping the bottom of the barrel. The relevance rating is often between 80 and 90% now.
So, probably fewer jobs out there.
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0 sats \ 0 replies \ @grayruby OP 25 Apr
I also keep an eye for contract jobs I might be interested in. Haven't seen many good options lately. So I definitely also get that sense.
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