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Posted

Oof!

Quote

The U.S. economy is in a potentially precarious position, having become "unusually reliant on rich Americans," The Wall Street Journal reports. As working- and middle-class households struggle to keep up with inflation, spending by the top 10% of earners has soared to account for almost 50% of all spending and nearly one-third of gross domestic product. Experts worry that if stock or home values decline and the wealthy cut back, the economic impacts could be "significant."

https://www.wsj.com/economy/consumers/us-economy-strength-rich-spending-2c34a571

Posted
2 hours ago, Captainant said:

"If line no go up, mongo lose his shirt"

Yea it’s a dangerous place to be in. I think partly to blame is the lack of honesty about the “Heater” economy that was pumped by folks who were looking to spin the economy/inflation for Biden, when talking about jobs and labor market and job growth (not saying that was you).

When the majority of the growth (80%) is in garbage jobs like low pay service jobs at holiday inns and McDonald’s of the world and (20%) a handful of speculative and bubble companies, you get situations like yesterday where depending on how nvidia’s Q4 went, either the market will completely tank or will be okay. Thats a dangerous position to be in!

The lack of the white and blue collar jobs that the middle class historically depended upon is dangerous. They are endangered. And so the billionaires have outsized influence (and the digital labor revolution, if it comes, will be the death knell).

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Posted

Purely anecdotal but I have noticed that in Temple, Texas the Firehouse I go to has had markedly fewer people eating during the noon hour. In Austin we eat out a lot and I have noticed lighter pressure at the places we go to, of late.  But we also often walking into a place at 5-5:30, so it's not a 7 pm peak observation. I need to ask the bartenders/managers if my perception is accurate or a misperception.

Lumber is up 18%+ since the election for example.  

But if my perception of the slowdown in Lunch is correct, breakfast is getting decimated.  I never go to breakfast, but usually the first cutbacks are eating out.  If lunch starts to pull back, then there are a lot of retail short opportunities that will present themselves pretty quickly.  I will be fascinated with the next few rounds of inflation reporting.  Market is skittish, and if there was a one two punch of boost in unemployment and rising inflation?  

 

Posted
3 hours ago, horn4life said:

Purely anecdotal but I have noticed that in Temple, Texas the Firehouse I go to has had markedly fewer people eating during the noon hour. In Austin we eat out a lot and I have noticed lighter pressure at the places we go to, of late.  But we also often walking into a place at 5-5:30, so it's not a 7 pm peak observation. I need to ask the bartenders/managers if my perception is accurate or a misperception.

Lumber is up 18%+ since the election for example.  

But if my perception of the slowdown in Lunch is correct, breakfast is getting decimated.  I never go to breakfast, but usually the first cutbacks are eating out.  If lunch starts to pull back, then there are a lot of retail short opportunities that will present themselves pretty quickly.  I will be fascinated with the next few rounds of inflation reporting.  Market is skittish, and if there was a one two punch of boost in unemployment and rising inflation?  

 

Junk food.  When the poors can no longer afford Mountain Dew/Lightning we'll know for sure #itshappening.

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Posted
3 hours ago, horn4life said:

Purely anecdotal but I have noticed that in Temple, Texas the Firehouse I go to has had markedly fewer people eating during the noon hour. In Austin we eat out a lot and I have noticed lighter pressure at the places we go to, of late.  But we also often walking into a place at 5-5:30, so it's not a 7 pm peak observation. I need to ask the bartenders/managers if my perception is accurate or a misperception.

Lumber is up 18%+ since the election for example.  

But if my perception of the slowdown in Lunch is correct, breakfast is getting decimated.  I never go to breakfast, but usually the first cutbacks are eating out.  If lunch starts to pull back, then there are a lot of retail short opportunities that will present themselves pretty quickly.  I will be fascinated with the next few rounds of inflation reporting.  Market is skittish, and if there was a one two punch of boost in unemployment and rising inflation?  

 

Every restaurant owner I talk to is bleeding out right now on most metrics...Overall seats, PPG (even in inflationary environs), labor cost, insurance cost.  Been that way for a long while now. 

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Posted
13 minutes ago, Trey3216 said:

Every restaurant owner I talk to is bleeding out right now on most metrics...Overall seats, PPG (even in inflationary environs), labor cost, insurance cost.  Been that way for a long while now. 

We have too many restaurants right now, but that will take care of itself in pretty short order. 

Posted
3 minutes ago, Bozo_Casanova said:

We have too many restaurants right now, but that will take care of itself in pretty short order. 

That is also true...It's also always been true.  

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Posted

I went to Total Wine and more.  Seemed super slow.  So I asked the cashier, and she was unsure.  A manager overheard and piped up "yeah really slow."  But honestly this is probably not inflation related. As the price of what I am buying hasn't changed at all in any of the places I mentioned. 

Honestly my observations are probably not related to inflation, but consumer emotion.  

Posted
2 hours ago, horn4life said:

I went to Total Wine and more.  Seemed super slow.  So I asked the cashier, and she was unsure.  A manager overheard and piped up "yeah really slow."  But honestly this is probably not inflation related. As the price of what I am buying hasn't changed at all in any of the places I mentioned. 

Honestly my observations are probably not related to inflation, but consumer emotion.  

1740173797928?e=1743638400&v=beta&t=KfMuEvUlgN_HSYRTXRE9x_Yk-DcwgQOHT6MzxKB6280

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Posted

Eh, half of Gen Z isn't old enough to (legally) drink.  The other age cohorts are 3X-4X as large when you consider (legal) drinkers.  Plus, those kids these days and their drugs.

Posted
8 hours ago, Vegas64 said:

1740173797928?e=1743638400&v=beta&t=KfMuEvUlgN_HSYRTXRE9x_Yk-DcwgQOHT6MzxKB6280

I always like to point out to Gen Xers, do you know that weed vape pin you just took a hit off is a felony?  Gen Z kids mostly have no idea that that vape pen is the same as carrying a 5 pound sack of weed.  

But I am simply saying that folks are pulling back at lunch and dinner from my observations, and at the liquor store.  Gen z not drinking sure as shit isn't what made the store slow last night.  

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Posted
17 hours ago, Parliament said:

Junk food.  When the poors can no longer afford Mountain Dew/Lightning we'll know for sure #itshappening.

Funny story, I saw a fuckin hard mountain dew in the beer aisle in HEB a few weeks ago

20250203_161237.thumb.jpg.a76513c2e511c0b6fa31b21228ff083d.jpg

Seems an inopportune product launch lol

Posted

About to run out, but new economic numbers show income up! ... but consumer pending down.  That's sort of a book end of actual data to my anecdotal observations.  As well as consumer sentiment polling.  A single data point, does not a trend make.  You would think if wages were climbing spending would also go up on your Eco 101 graph.

Posted
9 minutes ago, horn4life said:

About to run out, but new economic numbers show income up! ... but consumer pending down.  That's sort of a book end of actual data to my anecdotal observations.  As well as consumer sentiment polling.  A single data point, does not a trend make.  You would think if wages were climbing spending would also go up on your Eco 101 graph.

Many probably just got their home insurance renewal increase notice in the mail.  

Posted
12 hours ago, horn4life said:

I went to Total Wine and more.  Seemed super slow.  So I asked the cashier, and she was unsure.  A manager overheard and piped up "yeah really slow."  But honestly this is probably not inflation related. As the price of what I am buying hasn't changed at all in any of the places I mentioned. 

Honestly my observations are probably not related to inflation, but consumer emotion.  

A lot of it is consumer financial exhaustion 

Posted
1 minute ago, Trey3216 said:

A lot of it is consumer financial exhaustion 

It's almost like that unnecessary price gouging and record profit taking during late COVID does, in fact, have consequences. Markets are mad that line isn't going up like it used to during the pillaging, and wage earners are simply tapped out.

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Posted
1 hour ago, Captainant said:

It's almost like that unnecessary price gouging and record profit taking during late COVID

Oh man, you just had to lob the turd into the punchbowl, didn't you?

Posted
2 hours ago, horn4life said:

About to run out, but new economic numbers show income up! ... but consumer pending down.  That's sort of a book end of actual data to my anecdotal observations.  As well as consumer sentiment polling.  A single data point, does not a trend make.  You would think if wages were climbing spending would also go up on your Eco 101 graph.

In graphical form:

image.png.28a2aee410858c4a970d7354f37ac283.png

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Posted (edited)

https://x.com/GuyDealership/status/1895233603421761697

 

 

More Americans are falling behind on their car payments: The latest auto asset-back securities data shows that subprime 60+-day delinquencies hit 6.56% in December—the highest ever recorded. Even prime borrowers are slipping, though not nearly as much. And lenders are doing whatever they can to stop loans from going bad—namely—handing out extensions. Subprime extensions jumped to 3.81%—five times the prime rate. With DriveTime, Carvana, and Westlake leading the list for the highest year-over-year increases. Big picture: For borrowers—kicking payments down the road can add thousands in extra costs, and for lenders—it could create a wave of debt that’s unlikely to be paid. Read today’s top automotive stories, presented by

: https://carguymedia.com/41DoSmf

 
Edited by Trey3216
Posted
6 hours ago, jimmyjazz said:

Eh, half of Gen Z isn't old enough to (legally) drink.  The other age cohorts are 3X-4X as large when you consider (legal) drinkers.  Plus, those kids these days and their drugs.

True, but we've never seen as big a cultural acceptance and push for "non-alcoholic" then we have now. Beers, bars and even hard liqours. VC money pouring into the space (starting with Liquid Death you could argue) because there is a growing TAM and demonstrated traction of Gen Z not engaging in the alcohol culture that was the baseline before them.

Things can always change and they can easily revert to being just as big a consumer bloc as their predecessor generations (in the same way that as generations age they move from liberals to more conservatives)-- we will see. 

Posted (edited)
23 minutes ago, Vegas64 said:

Voluntary and positive acceptance I meant. As in, it's part of the "aura" or "vibes" and is cool to be sober or sober-curious.

I mean, you don't pass an amendment to the constitution without something being extremely popular. 

23 minutes ago, Vegas64 said:

Versus the nagging, nanny state "knows what's best for you" and makes booze illegal.

C'mon.

The nanny state and "knows what's best for you" usually happens after that popular opinion sublimates into a norm that's vigorously enforced by social conservatives. At least, that's what happened with the temperance movement and eventually prohibition.

 

edit: I realize that's a massive oversimplification of the dynamics behind prohibition lol. Just trying to make a point

Edited by Captainant
Posted
On 2/28/2025 at 10:56 AM, Vegas64 said:

True, but we've never seen as big a cultural acceptance and push for "non-alcoholic" then we have now. Beers, bars and even hard liqours. VC money pouring into the space (starting with Liquid Death you could argue) because there is a growing TAM and demonstrated traction of Gen Z not engaging in the alcohol culture that was the baseline before them.

Things can always change and they can easily revert to being just as big a consumer bloc as their predecessor generations (in the same way that as generations age they move from liberals to more conservatives)-- we will see. 

They did a E round in the spring of 2023 at a $1B pre.  Raised $75mm.  Then did another another round a year later at a $1.4B pre.  On 263mm in rev...for water.

Posted
3 minutes ago, babysdaddy said:

They did a E round in the spring of 2023 at a $1B pre.  Raised $75mm.  Then did another another round a year later at a $1.4B pre.  On 263mm in rev...for water.

exactly.

Posted
2 minutes ago, jimmyjazz said:

They got 5X revenue for WATER?

You should see the Kobe Bryant estate's return on Body Armour.   Pretty impressive.  

Posted (edited)
On 2/27/2025 at 9:46 PM, Vegas64 said:

1740173797928?e=1743638400&v=beta&t=KfMuEvUlgN_HSYRTXRE9x_Yk-DcwgQOHT6MzxKB6280

That’s a very interesting graph, since there are 75m people each in the boomer and millennial cohorts and  69m in GenZ, but only 66m GenXers.

Edited by Bozo_Casanova
Posted (edited)

Smells like a recipe for stagflation.

Tariffs on lumber and appliances set stage for higher costs on new homes and remodeling projects

Shopping for a new home? Ready to renovate your kitchen or install a new deck? You’ll be paying more to do so.

The Trump administration’s tariffs on imported goods from Canada, Mexico and China — some already in place, others set to take effect in a few weeks — are already driving up the cost of building materials used in new residential construction and home remodeling projects.

The tariffs are projected to raise the costs that go into building a single-family home in the U.S. by $7,500 to $10,000, according to the National Association of Home Builders. Such costs are typically passed along to the homebuyer in the form of higher prices, which could hurt demand at a time when the U.S. housing market remains in a slump and many builders are having to offer buyers costly incentives to drum up sales.

We Buy Houses in San Francisco, which purchases foreclosed homes and then typically renovates and sells them, is increasing prices on its refurbished properties between 7% and 12%. That’s even after saving $52,000 in costs by stockpiling 62% more Canadian lumber than usual.

“The uncertainty of how long these tariffs will continue has been the most challenging aspect of our planning,” said CEO Mamta Saini.

Bad timing for builders
The timing of the tariffs couldn’t be worse for homebuilders and the home remodeling industry, as this is typically the busiest time of year for home sales. The prospect of a trade war has roiled the stock market and stoked worries about the economy, which could lead many would-be homebuyers to remain on the sidelines.

“Rising costs due to tariffs on imports will leave builders with few options,” said Danielle Hale, chief economist at Realtor.com. “They can choose to pass higher costs along to consumers, which will mean higher home prices, or try to use less of these materials, which will mean smaller homes.”

Prices for building materials, including lumber, have been rising, even though the White House has delayed its tariffs rollout on some products. Lumber futures jumped to $658.71 per thousand board feet on March 4, reaching their highest level in more than two years.

The increase is already inflating costs for construction projects.

Dana Schnipper, a partner at building materials supplier JC Ryan in Farmingdale, New York, sourced wooden doors and frames for an apartment complex in Nassau County from a company in Canada that cost less than the American equivalent.

Half the job has already been supplied. But once the tariff goes into effect it will be applied to the remaining $75,000, adding $19,000 to the at-cost total. Once JC Ryan applies its mark up, that means the customer will owe $30,000 more than originally planned, Schnipper said.

He also expects the tariffs will give American manufacturers cover to raise prices on steel components.

“These prices will never come down,” Schnipper said. “Whatever is going to happen, these things will be sticky and hopefully we’re good enough as a small business, that we can absorb some of that. We can’t certainly absorb all of it, so I don’t know. It’s going to be an interesting couple of months.”

Sidestepping the tariffs by using an alternative to imported building materials isn’t always an option.

Bar Zakheim, owner of Better Place Design & Build, a contracting business in San Diego that specializes in building accessible dwelling units, or ADUs, said Canada remains the best source for lumber.

By sticking with imported lumber, Zakheim had to raise his prices about 15% compared with a year ago. He also has 8% fewer jobs lined up compared with last year.

“I’m not about to go out of business, but it’s looking to be a slow, expensive year for us,” he said.

Tariffs rollercoaster
On March 6, the Trump administration announced a one-month delay on its 25% tariffs on certain imports from Mexico and Canada, including softwood lumber. Tariffs of 20% on imports from China are already in effect. A 25% tariff on steel and aluminum imports — 50% on those from Canada — kicked in on March 12.

Tariffs on Mexican and Canadian goods slated to go into effect next month will raise the cost of imported construction materials by more than $3 billion, according to the NAHB. Those price hikes would be in addition to a 14.5% tariff on Canadian lumber previously imposed by the U.S., ratcheting up tariffs on Canadian lumber to 39.5%.

On Air Force One, President Donald Trump said he was pushing forward with his plans for tariffs on April 2 despite recent disruption in the stock market and nervousness about the economic impact.

“April 2 is a liberating day for our country,” he said. “We’re getting back some of the wealth that very, very foolish presidents gave away because they had no clue what they were doing.”

Building materials costs overall are already up 34% since December 2020, according to the NAHB.

Builders depend on raw materials, appliances and many other components produced abroad. About 7.3% of all products used in single-family home and apartment building construction are imported. Of those, nearly a quarter come from Canada and Mexico, according to the NAHB.

Both nations also account for 70% of the imports of two key home construction materials: lumber and gypsum. Canadian lumber is used in everything from framing to cabinetry and furniture. Mexican gypsum is used to make drywall.

Beyond raw materials, refrigerators, washing machines, air conditioners and an array of other home components are manufactured in Mexico and China, which is also a key source of steel and aluminum.

The tariffs will mean higher prices for home improvement shoppers, said Dent Johnson, president of True Value Hardware, which operates more than 4,000 independently owned hardware stores.

“The reality is that many products on the shelves of your local hardware store will eventually be affected,” he said in a statement emailed to The Associated Press.

Chilling effect
Confusion over the timing and scope of the tariffs, and their impact on the economy, could have a bigger chilling effect on the new-home market than higher prices.

“If consumers can’t plan, if builders can’t plan, it gets very difficult to know how to price product because you don’t know what price you need to move it,” said Carl Reichardt, a homebuilding analyst at BTIG. “If people are worried about their jobs, worried about the future, it’s very difficult to make the decision to buy a new home, whatever the price.”

The uncertainty created by the Trump administration’s tariffs policy will probably result in increased volatility for home sales and new home construction this year, said Robert Dietz, the NAHB’s chief economist.

Still, because it can take several months for a home to be built, the larger impact of from building materials costs are going to happen “down the road,” Dietz said.

The impact tariffs are having on consumers is already evident at Slutsky Lumber in Ellenville, N.Y.

“There are not as many people getting ready for spring like they usually are,” said co-owner Jonathan Falcon. “It seems like people are just cutting back on spending.”

Falcon also worries that smaller businesses like his will have a tough time absorbing the impact of the tariffs.

“This is just like another thing that’s going to be harder for small lumber yards to handle than the big guys and just sort of keep driving businesses like us to not make it,” he said.

Edited by bolverk
Posted

We have two apartment projects closing equity and debt this month and starting construction. The amount of time we’ve been negotiating to deal with potential tariffs among our partners, lenders, and contractors is ridiculous. Thanks a lot dickhead.

That said, we did issue an NTP to one of our contractors to buy out the lumber package. We locked in a lumber contract at $1.1M under budget. Because the subs are hungry.

Which sounds good until prices spike, and the sub comes to us and says hey sorry I didn’t lock in at the old pricing and now I will go bankrupt if I have to pay this higher pricing so here’s your change order.

Again, thanks a lot dickhead.

Posted

I can tell you one of the big home builders is telling all their vendors to bend over and reduce prices right now.  Because I just told them to fuck off on a proposal they sent me back with redlines.

 

Times are about to get real fucking interesting.

Posted
5 minutes ago, Hefeweizen said:

I can tell you one of the big home builders is telling all their vendors to bend over and reduce prices right now.  Because I just told them to fuck off on a proposal they sent me back with redlines.

 

Times are about to get real fucking interesting.

We are a big apartment developer. We’ve been telling subs and vendors to bend over and reduce pricing for 2+ years now. And it’s working. Our total cost per unit on new projects is down significantly vs projects we started 15 months ago. That’s how we’re getting deals capitalized.

 

In the apartment game, the fuck you response will put you out of businesses. Starts are off 50-75% in most markets. We had a meeting with one of our biggest GC’s a while back when interest rates rose. JP Morgan had just bailed on a job for us as equity despite having a signed term sheet. I stood up in front of 20 people at their office and walked through the math on a white board as to why something seemingly as innocuous as the 10 year jumping from 1.5 to 4 meant every line item in their budget had to come down 20-30%. And that every deal the thought they had in their pipeline was gone. This was in summer 2022. This group understood, got on board with us, and drank the koolaide on cost reductions with us. We’ve been able to keep each other in business the last three years because of it.

 

I suspect homebuilding isn’t far behind.  

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Posted

You might be right, but I’d just as soon pass on that work as do it for the reduced price.  One of the benefits of working for private and public clients.  I knew multi family had been there but I don’t touch those projects.

 

 It is the first clear sign to me that there is real fear that they are having to reduce prices further than just buying down mortgage rates and throw in extra incentives.

 

I also know a couple of developers who are really slowing down new lot delivery because builders willingness to pay top dollar per front foot is dropping.

  • Like 1
Posted

I do have some insight into one particular large public homebuilder. Cost is definitely an issue. Shits about to get real imo.

Homebuilding is always slower to react because their buyers are emotional. Our buyers/investors are institutional capital and react quickly and ruthlessly.

Of course, a meaningful drop in rates could change all of this.

Posted

Good discussion thanks. Super small anecdote but we aren’t building shit if it’s at risk. Customs with full financing and cash in the bank sure. But specs? We cannot for the life of us figure out how to squeeze enough profit out of them to make the risk worth it. Costs are too high, cost of capital is too high, sales prices and demand are too low.  And the math is not even close. 

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