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Monday, April 26, 2010

It's Time For Your Anecdotes

When I lived in New York City, I had my ear to the ground.  I wouldn't say that NYC is typical of the national economy, but at least I was getting out, seeing activity, seeing people waiting in line to pay $15 for a drink and $40 for an entree, or seeing stores closing when economics didn't keep up with soaring rents, etc.

Now, living in the woods, I have to admit, I have absolutely NO first hand sense of what the state of our economy is.  The trees still bloom, the grass still grow, the horses still graze.  "They" tell me that economic data suggests some signs of recovery, but I can't fathom how the average American can recover when 1) jobs are scarce and 2) the home-as-ATM model which fueled the middle of the last decade is dead.

I go to Lowes, Hannafords and Sam's Club on a regular basis, but perusing these Concord hot spots doesn't give me a sense of the status of the economic recovery:  if I go at noon on a Tuesday, they are empty. If I go at noon on Saturday, they are busy.  I'd hesitate to draw any conclusions from that.

I was home visiting my Dad this weekend in suburban Boston.  There is a little store in the little "downtown" area of his town that is PRIME retail space.  It's been vacant for 18 months now, I think, and is still vacant.  To me, that's one sign that not everything is "solved."  If I lived in my dad's town, I'd rent that spot in a heartbeat for a retail opportunity.  I even called the landlord last time I was home to ask about the rent.  Let me put it this way:  layup.

So, readers - I want your anecdotes.  What are you seeing?  Do you go to the mall and drive around for 25 minutes looking for a parking space because it's so crowded?  Are you unable to get into restaurants for dinner because everyone is out spending money?  Give me your channel checks from across the country!

CNN has a little 6 pack of slides today titled "My Recession is Over," with a handful of stories about people who say things are doing better.  One of the front page Bloomberg stories I saw today was trumpeting how stocks are "cheaper now than at any time in the last 20 years."  Of course it's no coincidence that the two mangers quoted in the article as talking about how cheap stocks are happen to manage two massive money management firms who NEED you to buy stocks.  For me, the truth remains: profits look good because government spending has replaced consumer spending.  That's no model for the future...

A related must read is Jeremy Grantham's quarterly letter about the latest series of bubbles the Fed is blowing, and how it all might end...

leave me your anecdotes in the comments - are you refinancing?  are you buying a house?  making big purchases?  how are negotiations with the banks in all of these transactions?

-KD

30 comments:

BigShow said...

Let's go to Vegas!

James said...

There may be some recovery, but if its because the government is doing reckless and crazy things at some point it will blow up again. I cant figure out how the real estate market makes sense for the next twenty years because of the boomers. The gov is wasting resources on housing in a battle it will lose

Taylor said...

I live in SE Georgia and the recession is not over. My brother owns an ATV dealership and people in the industry tell him they've never seen it this bad.

Want to kill the "recovery" and the economy as a whole? Let gas get back to three or four dollars. The only thing that kept up from having to eat in the dark in 08 was oil crashing back down and leveling off / lowering the price at the pump.

Hammer Player a.k.a Hoyazo said...

Things in NYC are pretty brisk I would say man. Not trying to say everything is back the way it was a year ago, but considering how hard hit business in the city was by the whole Wall Street fiasco of 2008 and early 2009, things have bounced back quite nicely IMO. Restaurants still busy at lunch, you still can't get a table at the good places without a rezzie, and the stores are generally crowded as well, both in the city and in the burbs as far as I can tell.

I think there is a lot of room between economy activity being brisk, and being back where it was in the height of the credit bubble a few years ago. And it may be largely due to "fake" government spending with a lot of companies, but whatever the reason I would say the economy has ticked up quite nicely since a year ago.

Jon in Madison said...

Cautious is the mood here in Madison, WI....seeing lots of houses coming to the market and moving quickly - but that seems to be b/c of the tax credit. Seeing some new stores opening here and there as well as some commercial real estate projects renewed or continued.

Of course, we're a university town and state capital, so we were relatively insulated from the Big Drop. Am seeing some hiring going on - but certainly not at the Boom Boom levels.

The coffee shop indicator tho, speaks bullish - lots and lots of people are crowding my favorite coffee shop and the owner's feeling good About Things having weathered the storm. He's planning to invest in some building upgrades, etc.

HighOnPoker said...

I've got a different take from NYC than Hoyazo. From what I see, there are lots of restaurants operating at less-than-full capacity on weekends and big nights. On the other hand, there have been a lot of stores recently opened down in the Financial District.

I even went to AC recently (well, three times recently), and whereas it is better than it was last year, things are still spotty. One weekend was crowded and the next month it was much less crowded, even though we were getting toward nicer weather (which usually corresponds with more visitors).

I know a lot of law students and former law students out of work and I don't see anything attractive out there for lateral moves. In other words, things are getting better, but they are not quite back on track.

What I am really curious about is the amount of people who are disenfranchised by the whole system at this point. I know I am, and the more I mention it, the more I meet people who agree. That's why I want to go the KD way and move to the sticks.

JCH said...

I applied for a home equity loan this morning, so we'll see if they're still taking on miserable credit risks.

I live in a Dallas and Houston. Malls are full. Our economy is definitely recovering.

Barry said...

I live in a Boston Suburb .I have underemployed friends that are very worried. when I go into a homedepot or Lowes the checkout lines are never busy and the amount of merchandise people are buying is usually small. I see people studying what to buy in the grocery store more than ever before. When I go to a mall which is not often I see a lot of vacant store fronts the 2 local malls are donating space one for a rmv office and another is offering space for an alternative school that’s prime retail space they are giving away as I walk around these malls I don’t see a lot of shopping bags and I don’t stand in long lines at the checkout counter. I don’t think that the country can create jobs quickly enough to compensate for the ones that were lost as extended unemployment benefits run out I fear things will get worse.

Kid Dynamite said...

thanks for the feedback so far, guys.

barry brought up an interesting point that I always focus on: RETAIL VACANCIES. Hoyazo, HighonPoker - THAT is what I always felt was most indicative about NYC: i lived in the West Village, and the retail space on Bleecker street south of 11th street, all the way down to the NYU area over by Thomson street is probably some of the most prime retail space in the country - yet there were MASS vacancies as I was leaving... i wonder if that's still the case?

the Village will always be busy on a Friday/Saturday night - so I always find "traffic" a difficult gauge: just like the grocery store is always busy on Saturday...

JCH - tell us more about your home equity loan... i would guess they take into account the current loan to value on your mortgage? your credit score? if you feel comfortable, give us more details about what happens where you hear back from the bank

James said...

I feel disenfranchised. Its a horrible feeling.

Taylor said...

On banking and loans: Only one local bank that I know of can make loans without regulatory approval and loan demand in general is almost nil. Almost all loan activity is in renewals and restructuring. Not sure about the local BAC and BB&T. A great many small local banks in the area were hammered by participation loans mostly out of the Atlanta area and their real estate developments. Add on the tighter restrictions, and local banking is tough. I even know of a few people that have the money to get loans with no problem that were denied due to new restrictions.

But What do I Know? said...

Things are OK here in the Philly suburbs, IMHO--we'll see what this house selling/buying season is like. I recently cash-out refied (less than 70% LTV) and good credit scores and didn't have any problems, although the mortgage guy did tell me after the transaction that anything which is not conforming is tougher to do. Plenty of retail/office space available--the less desirable buildings have been sitting for awhile.

Anonymous said...

Kid,

I spend lots of time up in the North Conway, NH area. I know many of the barkeepers on a first name basis.

The last 12 months was horrific.

More evidence of this is the number of vacant retail shops in the "shoppers paradise" on the strip up there. Ghost town.

N.Conway, I believe, is a fairly good indicator of how the disposable income situation is in Boston. And the picture is grim. Though it wasn't helped much by the mediocre winter.

~~vlcccashmachine~~

oddlot said...

Flight to quality. NY, DC, SF, Chi-town etc ripping. People are busy, real estate moving, restaurants full. Normal people in all the other places are not seeing it.

Seems like this trend should continue as cronyism is maintained/increased. Systemic risk is higher.

Just my opinion.

brendo said...

I know this is an American question, but just thought I'd throw in some Canadian bacon. Up here in Calgary, the housing market, shopping, eating out is cooking due to everyone thinking oil is going on another rip for ever. However, it all seems to be "older" people, who have investments, house, Escalade, poodle. I truly think this recession has killed the university grads, younger people searching for a job, as companies are not hiring youth. I think Canada has it coming, and failed to see the error of others....At least America had the chance to realize its mistakes...but who knows if they've just put em off.

JCH said...

My son got into medical school, so we are going to try and fund part of it with a 4-year equity loan.

It should be a slam dunk. House has a current market value of $300,000 plus, a 1st with a balance of $40,000, and no 2nds. We're trying to borrow $99,000.

It's a 2nd home, which is a negative, or so they say.

Other than that, we have no revolving credit. That might hurt our score.

Itamar Turner-Trauring said...

Prime retail location in Cambridge (right off subway stop in Harvard Square, as prime as it gets) has been empty for quite a while. Bunch of retail stores in Central Square (halfway between Harvard and MIT) closed, e.g. Gap... although some of those are being replaced by bank branches of all things.

Stephen T. said...

I know of Bronxville, NY and Kalamazoo, MI. Bronxville, New Rochelle, and Yonkers all look like they are doing well enough, but local restaurants and the mall are certainly not doing as well as one might hope. Kalamazoo is downright sad, but part of that is WMU student population is down to around 65% of its highest some years ago and the paper mills and pharmaceutical industry have been moving out for some time without significant replacement jobs from other growth.

I am a recent M.S. comp-sci graduate, so maybe I'm not doing the "right" things to get a job as I have not learned how yet or whatever, but I get like one interview for every 50 applications I fill out and I know my unemployed friends are not fairing much better (and those who are employed would not even consider looking for a better position presently).

Anonymous said...

writing from central tokyo. in omotesando on the weekend, the chanel was crowded with people buying. bulgari was completely empty. both are on the ground floor of the same building. restaurants in the same building were crowded.
roppongi hills and midtown shops were empty. restaurants were crowded.
didnt notice any retail vacancies. the big Gap store in omotesando was torn down and is being rebuilt. the hanae mori building looked like it was being prepared to be torn down.

Mike K said...

Here in the DC Metro area, you'd never know there were any economic issues at all.

Onlooker said...

Can't help you out much KD, as I'm in basically the same situation as you are, but in MO. I hate malls and the like and stick to my small town for the most part.

But one thing I have noticed is that houses seem to be going up again around here. This area outside of STL was growing pretty quickly in the '00s with lots of housing tracts going up all over the place and the population growing pretty rapidly (much to my chagrin).

I don't know if it's really any different, or if I just happen to be seeing the new starts. Haven't done any research on housing starts, though I may look into it.

Anonymous said...

I'm in Santa Fe - not exactly huge city but we get a lot of art-buying travelers. Retail space downtown is more empty than I've ever seen, and seems to be getting worse. I've also seen some of the bigger galleries here have shutdown. I've never been able to reconcile that with the TIF-going-nuts retail news, but thats what I see.

Tom said...

Wayne NJ about 25 miles west NYC -Macys as long as there is sale on is almost comical how crowed it is. I talked to 4 or 5 workers and they say it is like that everytime there is sale.when there is no sale there is business but down significantly.

Anonymous said...

Mornin' Kid,

Report from Breckenridge, CO. We're a resort town which gives us a different kind of measuring stick. Skier visits were down only marginally this year. Building projects are still pretty much stalled. Enrollment at the local high school down significantly as itinerant building trade folks moved away and have stayed away. We still have twice as many houses on the market as usual. Anecdotally, folks who had money before 2008 still do and seem to be living about like they did. Folks who were living paycheck to paycheck either left town or are pretty scared. I get the feeling that another serious down turn, even a short one, will push a lot more people over the edge.

AS said...

I have seen a few patterns in my friends who graduated from college in 2009. Many of those who have found good jobs work in government, medicine or education. Several work for their parents or work at their parents employers. Two close friends went to Korea to teach English. The remainder are in restaurants or retail trying to land a job in their desired field or waiting for grad school. The best and the brightest have not really suffered. I don't really detect a lot of pessimism.

MrDan242 said...

I live in Akron, OH and work in Canton.
There are lots of vacant store fronts, especially the ones slightly off the prime strips. All the big spaces I can think of that opened up stay vacant (think Circuit City & Linens N Things), save for the temporary Halloween costume stores.

Restaurants (mostly chain) seem crowded whenever I go out or drive by though(weeknights & weekends). Noticed some have downsized the portions and cut price a little, also seeing chains put coupons out in paper or mailers; might be helping traffic.
Homes sales might be picking up some. Plenty of For Sale signs around neighborhood, some coming down, seems like due to being sold. Not sure how much is Tax Credit or what pricing strength is.

scharfy said...

My monthly inflows/outflows are about the same - but the makeup and composition have shifted dramatically. Many of the group I hang with (30-35) have seconded this behavior.


In short - less expensive car leases - more paid in cash used cars. Two or three friends had leases roll off and "downshifted"

Less expensive wasteful dining - more thoughtful food purchasing of steaks/wine from costco / butchers or online.

less of my girl showing up with dumb ass $200 purchases from Macy's more calculated buying online

Vacations more targeted and less "over the top" (Driving to wisconsin for a weekend suffices now)

Cell phone packages/ cable movie/ all reduced just out of the sensibility aspect.

Overall my mindset has shifted from "more is better" to "more is more"

Classic friday night idiot behavior has been reduced and proceeds have been funneled to more sensible areas.

Overall - many of the people I know are lucky and still have jobs - and overall are still spending- but the spending patterns are dramatically different.

This may be a factor of just my age grouping but it seems to be more pervasive..

Also the midwest wasn't as "bubbly" as other areas so the overcapacity in terms of mini-malls etc - was quite as bad.

Anonymous said...

I live inside the loop in Houston, TX. Our neighborhood's real estate prices are around flat over the last 18 months. I have noticed what I believe to be good "box type" retail space go vacant near our neighborhood. A big liqour store chain gobbled up the largest prime space, which makes sense. The smaller, less traveled spaces are still losing tenants. One of Houston's best attributes are its restaurants and I haven't noticed much of a slowdown in the lower-medium priced restaurants. However, I stumbled into an above average steakhouse on Saturday night and it was about half full. I don't get out on Saturday nights much anymore, but 3 years ago there would have been a wait on any Saturday night. I believe Houston has been one of the strongest cities across the country over the last 2 years, but there are small signs of a slowdown or at least stagnant growth.

Daniel said...

Downtown Burlingame California on a Friday afternoon at 2:30 pm. One vacant storefront on the main drag of Burlingame Avenue. All retail, restaurants, clothing, florists, jewelers etc. Not an empty parking space to be found. Apple store is packed. Lots of women having lunch and sitting at outside restaurant tables. Pedestrians everywhere.

Anonymous said...

My family lives in the Seattle/Bellevue, WA area. Recently we made the commitment to send our daughter to a private high school. The school we settled upon charges over $20,000 per year for tuition. It is a highly desirable school to be sure but I was nevertheless struck by the demand for its services. We were told that five students applied for each one admitted. Financial aid is available for some (not us) but I do not gather there is a lot of aid rebated by the school to attending families.