Any Business Owners noticing a decline?
General Topic
Contributors to this thread:
eBike John 03-Jun-22
Guardian hunter 03-Jun-22
Shiloh 03-Jun-22
Charlie Rehor 03-Jun-22
TREESTANDWOLF 03-Jun-22
cnelk 03-Jun-22
Missouribreaks 03-Jun-22
Will tell 03-Jun-22
groundhunter50 03-Jun-22
Woods Walker 03-Jun-22
Treeline 03-Jun-22
Dano 03-Jun-22
eBike John 03-Jun-22
RonP 03-Jun-22
12yards 03-Jun-22
WV Mountaineer 03-Jun-22
KHNC 03-Jun-22
SBH 03-Jun-22
Hackbow 03-Jun-22
Lewis 03-Jun-22
ahunter76 03-Jun-22
Kydeer1 03-Jun-22
APauls 03-Jun-22
Chuckster 03-Jun-22
Jeff Durnell 03-Jun-22
brettpsu 03-Jun-22
WV Mountaineer 03-Jun-22
bowhunt 03-Jun-22
deserthunter 03-Jun-22
MPN 03-Jun-22
LUNG$HOT 03-Jun-22
jjs 03-Jun-22
Boreal 03-Jun-22
brettpsu 03-Jun-22
Jaquomo 03-Jun-22
TD 03-Jun-22
Highlife 03-Jun-22
SteveB 03-Jun-22
MA-PAdeerslayer 03-Jun-22
Bowfinatic 03-Jun-22
GFL 03-Jun-22
Grey Ghost 03-Jun-22
Thornton 03-Jun-22
Rickm 03-Jun-22
Mike Ukrainetz 03-Jun-22
Grey Ghost 03-Jun-22
Mike Ukrainetz 03-Jun-22
Grey Ghost 03-Jun-22
HDE 03-Jun-22
Buffalo1 03-Jun-22
Knifeman 03-Jun-22
txhunter58 03-Jun-22
Grey Ghost 03-Jun-22
Bearman 03-Jun-22
Recurve Man 03-Jun-22
Dano 03-Jun-22
txhunter58 04-Jun-22
DanaC 04-Jun-22
TREESTANDWOLF 04-Jun-22
Swampbuck 04-Jun-22
TREESTANDWOLF 04-Jun-22
DanaC 04-Jun-22
Beendare 04-Jun-22
Matt 04-Jun-22
Wackjob 04-Jun-22
DanaC 04-Jun-22
bill v 04-Jun-22
Mike Ukrainetz 04-Jun-22
Matt 05-Jun-22
Beendare 05-Jun-22
Mike Ukrainetz 05-Jun-22
Dano 05-Jun-22
MPN 05-Jun-22
Dano 05-Jun-22
TreeWalker 05-Jun-22
Mike Ukrainetz 06-Jun-22
RT 06-Jun-22
Dano 06-Jun-22
Mike Ukrainetz 10-Jun-22
Beendare 15-Jun-22
SteveB 16-Jun-22
ahunter76 16-Jun-22
tobywon 16-Jun-22
SteveB 16-Jun-22
WV Mountaineer 16-Jun-22
From: eBike John
03-Jun-22
Hey folks, Some of you know me from eBikeGeneration.com (sponsor). I've noticed this year is vastly different from the last 2 yrs and was wondering if other business owners are experiencing something similar. I can only speculate that the looming recession, the war in Ukraine and increased cost of raw materials hiking up prices doesn't help when selling expensive goods.

What's it like for others?

Have an awesome weekend !

03-Jun-22
My business partner and I look over many potential deals every year to invest into. We look at Businesses , properties, mostly commercial, flips etc. We have determined that the risk usually outweighs the potential return. I bought 1 small farm this year and that was all. This is a big red flag. Very much like the Jimmy Carter days. Grab a Billy beer and be patient is my thought. Just build capital. My thoughts.

From: Shiloh
03-Jun-22
Same for me. Closing a real estate deal soon and instead of a 1031 into an inflated market we are just gonna sit on it and wait. Had a car dealer call and ask if we wanted to get some priority orders in on new trucks and we politely passed. Gonna repair what we have and wait for prices to come down.

03-Jun-22
Stimulus checks fueled new bow, ATV, ebike and other “optional” purchases. Now that party is done and inflation is our reward. Study the economic malaise of the seventies. Anyone under 50 has not seen what happened then.

03-Jun-22
Charlie nailed it. My service business (Electrical Contracting) is steady. New construction into the fall (Ultra High End Homes) are on the books, however I know better, they can pull the plug and minute. Concerning, yes, worried? Not yet simply based on my geographical location and service area.

From: cnelk
03-Jun-22
When the richest man in the world just announced he's freezing hiring and cutting 10% of staff.... yeah... somethings coming

03-Jun-22
This is what America voted for, it is here!

From: Will tell
03-Jun-22
Don't think Politics and the Economy are the same. It's a world economy and changing political parties won't stop the ups and downs. They've been predicting a slow down for quite awhile.

03-Jun-22
We are already in a recession , to me thats obvious................

From: Woods Walker
03-Jun-22
Let's Go Brandon!

From: Treeline
03-Jun-22
I remember the big crash in the 1980’s. This looks like what is fixing to happen. The USA and many other governments have been spending money that they do not have for years.

The recent global government over reaction may throw us into a global depression the likes of which we have never seen…

From: Dano
03-Jun-22
Just wait til quanitve tightening get up and running. Get rid of all that fake paper floating abouts. Then, rates start going up up up.

Will buy one more piece of investment property with a great rate locked in for 180 days 3 months ago. Then, its sit back and watch Joes team burn it all down.

Dano

From: eBike John
03-Jun-22
Right. this year definitely feels like a recession. Those stimulus checks certainly helped sales but i was tricked into thinking that was the new norm and wasn't quite prepared for this years drop. Oh well, it will be a year of this so I'm adjust and keep going.

One thing I've learned in business is when the tough times arrive I learn the tighten the belt and spend better. And get more creative. All of which should make for a healthier business once we're out the other end.

From: RonP
03-Jun-22
ebike john, i have noticed a difference in business and the general sentiment. the fact is no one is better off today than they were last year, two years ago or five years ago.

to repeat what has already been said here on bowsite as well as by many others, a recession is on the horizon and has likely already started. i'm not smart enough to see what steps could be taken to avoid it other than a complete flush.

recently janet yellen said she didn't understand the indicators when a few months ago she said the spike in inflation was transitory. c'mon, wtf.

biden recently said the same regarding the baby formula shortage. again, wtf. you shutdown a manufacturer that supplies forty percent of a consumable and you can't foresee the impact? smh.

i won't get too specific but i am sure many of you, like me, see the different groups and states that are being impacted, and intentionally targeted (no pun intended), and those that are ignored or demeaned. it is so obvious the saying 'even steven wonder' can see it applies.

will enough voters see it to make a difference by not just voting, but holding their representatives accountable? i'm a pessimist.

From: 12yards
03-Jun-22
Add another Covid peak and shutdown after the election this fall and the writing is on the wall. Bad moon rising.

03-Jun-22
But on the bright side if you trade in your “Automatic” AR you get free college

03-Jun-22
Yes. Not nearly the calls for residential work. And, quite a few changing of minds based on current co dictions. At least that’s the excuse they have given. And, I can’t see where they are lying about it.

Plus, We’ve bid and won several commercial jobs. Only problem is the county commissions and federal money that has been a large part of my companies cash flow previously, has been put on hold or we are being told the local governments are choosing to wait this out before moving forward.

So, the jobs are in limbo. Which sucks because I’m men heavy in preparation of their start date. They just keep getting pushed back due to lack of funds being released or frozen.

So, there’s two huge entity’s, that were 80% of my business last year, that have pulled out of moving forward. It’s definitely going to hurt losing that anticipated income.

It’s hard to keep large crews busy on strictly residential work. We do have a couple houses on schedule but, the site work hasn’t been started yet. So, I’m not counting them until it’s time to start the framing.

All these new happenings keeps my foreman’s and myself hoping trying to get enough work to move foreyard. Which severely hurts productivity. Which is the defining variable in profitability.

It’s about to get real tough. Real soon for businesses. By the time it’s over, every small business in this country is going to have to really tighten up to get through this with any resemblance of what they started with. I pray I’m one of them that does.

From: KHNC
03-Jun-22
Diesel costs will gradually shut everything down. Either they have to be brought under control soon or everything will continue to sky rocket as a result.

From: SBH
03-Jun-22
John, How much if any effect do you think the recent decisions on where ebikes are allowed is having on your sales?

I'm in construction in MT and we are not yet seeing anything resembling a slow down. Not enough workers to do the work is going to keep demand high for a bit. The demand is so high because no one wants to live in the hell holes the dems have created in their states. My phone rings multiple times every week with people moving out here. I agree the economy is going the wrong way and our current leadership is pathetic. Criminals, liars and thieves at the wheel. Nothing good will come of it.

From: Hackbow
03-Jun-22
Fortunately, we live in N TX and work regionally, so we haven't experienced any slow down. Yet. Our residential side continues to grow rapidly with minimal effort and our focus on commercial, industrial and institutional is paying off well. Three of the main factors in our favor is that we are small enough to be very responsive, our team's collective experience is better than almost any other company in our space and we have an incredible network of business relationships, clients and friends that refer our work to the point of not needing a dedicated sales position. Yet.

However, the writing is on the wall. There will be a crash and it will affect nearly everyone. Fuel is a large expense for us. Our materials prices have continued to rise - just received a notification yesterday of another increase on a core product to take place on July 1st. We've raised prices to our customers, but haven't recovered all the increases. Thankfully, our heavy commercial, industrial and institutional work won't totally go away due to the necessities of facilities' maintenance needs. I am working to wean us off of any reliance on residential or light commercial work in the next 18 months.

Wish I could say our relatively good position was from a well-crafted strategic plan but it was a day-one scamdemic realization when the government setout to destroy independent operators and small businesses.

The road ahead will be tough for many. I'm working to hang on long enough so that the families dependent upon the income our business provides can still remain employed. But anyone with half a brain cell knows we are just one more liberal govt regulation away from "failing" at our chosen business. Good luck folks.

From: Lewis
03-Jun-22
Talked to a buddy of mine who owns a sporting goods and bow shop he said he is down over 50% from last year I’ve pulled in my horns get some popcorn and just watch and wait I’ve seen this scenario before and it’s going to get nasty.Good luck Lewis

From: ahunter76
03-Jun-22
Sadly, we "are" here because of current politicians "giving" freebies. Working folks get screwed & those who "cry" the most get the handout.. NOW the "working" man is going to pay off a big chunk of the "loans" the college kids or parent DON'T WANT TO PAY.. I'm looking for some restitution for those "retired" folk that DID work & pay their bills for 50 years + in the workplace & "did not" go to college. I'll be pushing up daisies b/4 we see that.

From: Kydeer1
03-Jun-22
It's a little down from last year on my end, but I would expect that with the "free money" that was floating around. Goods and services seems to still be rocking from what I can tell, vacation places are still booked. I'll tell you though with these fuel prices continuing to rise it's not only going to affect us individually but shipping will get crazy and that cost getting transferred to customers. I really don't think it's gonna be as bad as we think it will, but I wouldn't be surprised with some tight times in the future for small businesses.

From: APauls
03-Jun-22
There was no way the bubble of the last couple years was ever gonna last for those that were in business of discretionary goods that people could buy locally. Travel was down so people were looking to spend on fun stuff at home. In the ebike business that was "Make hay when the sun is shining" time. All toys, boats, quads, sleds etc saw record demand spikes. Home improvement, deck building, cottages, vehicles etc etc.

I'm in both home Reno and travel industry. Home Reno's was hotter than ever, travel obviously dead, and slowly picking up. For travel it just sucks that recessions are hitting just as the travel is opening up. With travel being dead for a couple years, labour all vacated and moved into other industries so it has been a slow start up. Airports can't even staff TSA agents to get people moving. All around a giant stupidity that anyone with a brain saw coming. Unfortunately it seems the number of people with a brain is vastly overshadowed by those without.

My favourite quote: "Just remember how dumb the average person is, and realize that half are dumber than that." lol

From: Chuckster
03-Jun-22
As a Real Estate appraiser I have definitely seen a slow down but I still have work. I have been so busy the last 2 years I was turning work away. Now its enough to keep me busy. Luckily, my wife has a good job with health insurance. I'm afraid things are going to get worse in the next 12 months. I really feel for the young families with a mortgage, car payments and a couple kids.

From: Jeff Durnell
03-Jun-22
My wife and daughter started a certified gluten free bakery several years ago and it was booming, they gathered several more wholesale accounts in the last year or two, and almost committed to a new big building with a lot of overhead just months ago. They wanted me to retire last year and come work with them, but you know the 'eggs all in one basket thing', so I convinced them to wait on the new building, and I kept working... cuz I saw it coming. And it's about to get worse, maybe much worse. Anyway, she came home last night and said they're thinking about closing up shop. Less and less customers coming in, same for their wholesalers. Consumers are feeling it, and they're pulling back. Lease is up in August. Probably done. There's going to be a lot of small businesses closing down. Also part of their plan. Thanks dems antiAmerican pos. Hey, the good news is... no more mean tweets!

From: brettpsu
03-Jun-22
I'm in the lumber and building industry and it's really slowed up. For the past couple years open mill offerings were either non existent or max 5-6 truck loads available, which got snatched up instantly. Just yesterday the 4th largest producer had 200 truck loads ready to ship prompt. I can't imagine what the top 3 had ready.

03-Jun-22
I don’t think recreation based businesses will see the full effect until this gets rolling. So many people like me, reserved and paid for their vacation house, fishing charters, beach activities, etc…. Last year. In anticipation. So, it was a suck it up and do it kinda thing over the last holiday.

I personally had to reschedule my off shore fishing trips due to bad weather last month. I was fortunate to be able to reschedule the house too. However, I was unable to get a refund on the house. So, I was forced to reschedule the charters in the time line that matched the new reservations this fall.

I was blessed in that. But, frankly I’d cashed them all back in if I had that option and not even go. By doing this, it took out my planned elk hunt. But, I wasn’t prepared to just throw $2300 away. So, it is what it is.

I think a lot of people are in the same boat. I keep hearing how tines are t affecting travel. And, in my opinion, it’s naive to think that. Because it is going to affect it once people aren’t locked in and paid up on these travels. Next spring is likely to be different for tourism and recreation business. Very different. I’d hate to be setting on a dozen or so properties geared around tourism right now. If they aren’t paid for, a lot are going to be going back to the bank if these conditions persist.

From: bowhunt
03-Jun-22
There is definitely an economic change in the air in my area. At this point every person I know in the same type of business has seen a big slow down. For some it started I April, but bye the end of May it had hit everyone I know. All the lenders my business and the other business owners I know started to tighten up 3-4 weeks ago. These are various credit unions and banks that do loans for all of our customers.

We have also seen a shift in the amount of money people have for down payments, and are seeing less people with good credit. The percentage of people trying to buy that can not get financing has also increased.

Also started seeing significant price drops on homes listed for sale in the area in the last 10-14 days.

Some definite change in the air.

From: deserthunter
03-Jun-22
brettpsu If the inventory from the manufacture is not being bought up ? What is keeping the retail pricing so high ?

From: MPN
03-Jun-22
The current economic inflationary environment is the result of years of offshoring, covid lock downs and the Russian invasion. Ultimately , and unfortunately for business owners, demand destruction, which has already begun, will help right the ship. The fed will continue to hike rates until that destruction is realized. China reopening will help alleviate supply issues, Russia is causing the energy spike and state side oil patch is playing for cash this time, can’t blame them. Until demand destruction is realized, it will be painful.

From: LUNG$HOT
03-Jun-22
Residential real estate appraisals in my area have taken a drastic nose dive as far as folks refinancing. Rates continue to climb and people who didn’t already refi when rates were low most likely won’t. Homes that hit the market for sale still sell fast but we’re seeing days on market increase. Last week we had our first round of “Foreclosure” appraisals hit our desk. Not a ton of them but still the first I’ve seen in a long time.

From: jjs
03-Jun-22
Bottom line it is the spending, $32trillion debt and $200+trillion unfunded liabilities with Fed digital money printing the storm is coming along with Brandon economic policy, boom.

From: Boreal
03-Jun-22
My business (auto repair) is up 27% over last year YTD, which was up 38% over 2020 YTD.

From: brettpsu
03-Jun-22
"brettpsu If the inventory from the manufacture is not being bought up ? What is keeping the retail pricing so high ?"

Lumber, Plywood and OSB retails should be down already, and by a fair amount. Prices are still dropping just won't see the bottom on the retail end for another 3-5 weeks. Just look at the lumber futures market it's lost 60% in just a few months

From: Jaquomo
03-Jun-22
A little over month ago, high end mountain second homes in my area were getting multiple offers over asking within a couple days of listing. Now the bottom is dropping out. Had one offer on my extra place in eight days, only seven showings, and I took a little less than listing price. Feeling lucky to get what I got, considering what the realtors are telling me. Still made a good return, but not what it would have brought in April. Scary how something can switch gears so fast.

From: TD
03-Jun-22

TD's embedded Photo
TD's embedded Photo
naaa.... it'll be fine. Our government must be flush with cash....I mean, they just promised 40 BILLION to Ukraine. Once our politicians get their kickbacks and they begin "redistributing" that back here at home from their offshore accounts, (just like they did last time....) that and a bit of lube should "stimulus" things nicely.......

From: Highlife
03-Jun-22
In the draft beverage service and syrup industry. Our great Gov Freddie flintstone killed over 9000 bars and restaurants. Lost a third of our business 08 Crash took me 2 years of blood sweat and stubbornness to get back to where we were This time not to sure.

From: SteveB
03-Jun-22
We are in the Commercial I.T Business and so far so good. But we are well aware that the horizon isn't looking near as inviting.......

03-Jun-22
Notice a difference? Yes

Are we in a recession? I believe yes it’s already here

Drop off in business? To a point. Some residential “remodels” etc are slowing down. However, people will always want heat, hot water and working plumbing systems. The biggest problem I see around me is, one man shops. Tough to compete when they work for a beer and dinner at the end of the night and a company like us has a full time office, 5 vans, 4 trucks and your typical overhead. Our commercial and industrial contracts still need stuff done so we’re doing good. Sit back and watch. See what happens. FJB Let’s go Brandon

03-Jun-22
I'm in the wooden pallet business in most industry spectrums. Demand for product is still red hot and has been so for 2 years. Typically we are a decent indicator or what sectors are slowing or booming. Right now haven't seen any pullback

From: GFL
03-Jun-22
I own a concrete company… Google cement shortage.

From: Grey Ghost
03-Jun-22
A recession is defined by 2 consecutive quarters of negative GDP growth. I don’t think that will happen, barring another pandemic or war. Oil producers will eventually catch up to demand, and inflation will slow. Rising interest rates and supply chain fixes will help balance the equation, as well. But then, I’ve always been a glass half full kind of guy.

Matt

From: Thornton
03-Jun-22
I own a lawn and landscape company. I really wasn't looking to expand because they are paying us crisis pay at my RN job in ER. Unbeknownst to me, several other local lawn companies folded, or got too big to keep up with all the rain, and I've gained quite a few new contracts without looking. Last month I billed out more than I ever have in 18 years. I'd have to agree on the stimulus checks and covid pay. Ole' Biden bought me about $6k in guns and a new ebike last year between stimulus checks, ER covid pay, and grants. I will say, city and HOA regulations and landlords enforce keeping the grass mowed which really helps my type of business.

From: Rickm
03-Jun-22
The last 2 years were artificial. All the government spending added fuel to the fire. Interest and inflation are trending up. It's correction time. Good news is there will be deals on E Bikes, RVs, atv's and real-estate if you have any money left after filling the truck. God speed and good luck.

Seriously hope we all make it through the next few years and prosper.

03-Jun-22
Can anyone explain to me how 8+% inflation rate is countered by a 2-3% interest rate for your savings? Or even a 5-8% interest rate?

Doesn’t the interest rate for savings have to be above the inflation rate or don’t too many dollars continue to chase too few goods? Isn’t this the most basic of economic truth?

From: Grey Ghost
03-Jun-22
You don’t get anywhere with money in savings accounts. That’s economics 101.

Matt

03-Jun-22
Matt, by savings I mean the treasury rate, or the rate you can get with say a government bond, and not spending it on goods, not with a simple savings account with your bank. I know you think you are so much smarter than everyone else on everything though, so I do understand your smart ass remark.

The 10 year treasury rate in 1980 and 1981 was 11% to 16% to counter a 10-13+% inflation rate. The 10 yr rate now is 2.85%, with talk of it going up just another 1%, how does that counter inflation that is 8+%? The math doesn’t add up does it?

From: Grey Ghost
03-Jun-22
Interest was also at 16-17% in 1980-81.

Matt

From: HDE
03-Jun-22
This is a funny thread.

From: Buffalo1
03-Jun-22
If you can't smell something in the air- you need to visit an ENT physician !

From: Knifeman
03-Jun-22
I have owned my painting business , new construction, since 1987. I have seen some ups and downs. The last few years have been unreal, as there are so few of us working and doing quality work, there has been no downturn. Busiest we have ever been, I turn down work damn near every day. The last slowdown was in 2008 - '09. The paint shortage has been the only real negative. I have noticed a slowdown in plans to bid, we are out 2 years then ?

From: txhunter58
03-Jun-22
Recreational luxuries (let’s face it, an ebike is not a necessity) and real estate peaked during Covid. I think both are on the way down.

PS. I bought 2 ebikes in the last 2 years and went riding today in CO

From: Grey Ghost
03-Jun-22
My e-bike is getting serious mileage in prep of my sheep hunt this year. Thanks Boe Jiden! :-).

Matt

From: Bearman
03-Jun-22
I'm gonna become a Democrat. Sit on my couch and watch the "view". I can live on turkey n Ramen noodles.

From: Recurve Man
03-Jun-22
Not any slow down in sight in the custom cabinetry business. Calls weekly and they cannot believe there's a 16 week lead. People have told me they are using vacationing money for cabinets when all the covid shut downs were in full swing. This hasn't let up for 20 months. Plus if i find out your a liberal idiot i don't work for ya either. I don't need their money or ignorance.

From: Dano
03-Jun-22
Saw 3 yr Treasury hit almost 3% other day.

You wont see this guy Powell rAise rates 5% over inflation rate.

1985 rate calculation would put us at 21% so that would crush the markets if rates would rise above that

Powell with ticky tacky rate increases and this butt pain will linger for a long time.

Feds debt sheet needs to be reduced. and s”Start tightening QT and get the furnaces burning paper. Dano

From: txhunter58
04-Jun-22
John (and others)

A bike question. We traveled a lot today with the bikes on a rear carrier down dusty gravel roads. . They are both cached with dust. Would it be wise to wash them down with a water hose. Maybe covering the motor area with plastic?

From: DanaC
04-Jun-22
Tex, got an air compressor? Even a small 12v 'plugs into the cigarette lighter' jobbie ought to get most of it off.

Covering the motor sounds good.

04-Jun-22
I’d like to add one additional opinion to this thread.

Many of us are still so busy because WE CANT FIND GOOD HELP.

That alone is keeping the “ Wheels on the bus” around here.

From: Swampbuck
04-Jun-22
I work for a 1%er in the food distribution industry, own a timber company and a backcountry charter business. Personally the only thing hurting me is fuel cost. My charters are steady( select clients) getting ready for a couple tarpon tourneys. Timber prices are good and the bosses check keeps clearing, but $4-6 for diesel and $5-7 gas doesn’t help the bottom line

04-Jun-22

That alone is keeping the “ Wheels on the bud” around here.

From: DanaC
04-Jun-22
" Many of us are still so busy because WE CANT FIND GOOD HELP. "

Plenty of open jobs around here. What I suspect is that, during the Covid shutdown, a lot of folks re-assessed their careers and said 'screw that!'

Too many *lousy* jobs, but even those employers are finding out that low wages and lousy treatment means people won't show up. Today I could go get a job washing dishes for better money than I made ten years ago doing skilled fabrication.

I retired three years ago and I would *not* go back to that work for what I was being paid.

Add that to the fact that a lot of people learned to do with less during the shutdowns. People learned how to cook from scratch, hang their clothes out to dry like granny did, do more car repairs etc. etc. The learned that they didn't need a week at the beach every summer.

People are going back to work, but the days of 'you'll take what we pay and we expect 65 hours a week' are done.

From: Beendare
04-Jun-22
My 2 businesses are still booming here in Ca; Construction and other

Edit- I should clarify, my one company is a small niche contracting business that is in very high demand… both of my businesses are pretty inflation proof.

I should be retired but I think I’m going to work a couple more years to buy a hunting or fishing property

From: Matt
04-Jun-22
"A recession is defined by 2 consecutive quarters of negative GDP growth. I don’t think that will happen, barring another pandemic or war. Oil producers will eventually catch up to demand, and inflation will slow. Rising interest rates and supply chain fixes will help balance the equation, as well. But then, I’ve always been a glass half full kind of guy."

I tend to agree on the recession point, or think any recession that does occur will be short-lived (at least based on current sight lines). And I don't think that negative growth should necessarily be looked at as a really negative economic factor. We had artificially inflated growth for a couple of years due to gov't stimulus and scarcity due to supply chain constraints due to COVID and now the war in Ukraine. At some point that will cool and growth will normalize, resulting in negative GDP growth. That is healthy - a return to normalcy so to speak, and not necessarily something to be scared of.

Fundamentally, I think anyone who is seeing signs of another 2008 are being overly pessimistic and ignoring some the economic fundamentals which are signs of a healthy economy (low unemployment, high inflation).

On the oil supply side, from what I have been reading it sounds like it is more likely that any price reductions will be caused by demand destruction and not increased production reconciling with current levels of demand. The notion is that at some point, these high prices will reduce consumer willingness to pay them, and demand and ultimately prices will decrease.

"Matt, by savings I mean the treasury rate, or the rate you can get with say a government bond, and not spending it on goods, not with a simple savings account with your bank. I know you think you are so much smarter than everyone else on everything though, so I do understand your smart ass remark.

The 10 year treasury rate in 1980 and 1981 was 11% to 16% to counter a 10-13+% inflation rate. The 10 yr rate now is 2.85%, with talk of it going up just another 1%, how does that counter inflation that is 8+%? The math doesn’t add up does it?"

Fed funds and savings rates are not set to "counter" inflation in a proportional sense - meaning if inflation is 10% the fed won't increase rates to 10% to counter it. I can't recall a time in the past 25 years that any savings instrument would keep up with inflation although they generally increase and decrease in roughly the same timeframe.

"Saw 3 yr Treasury hit almost 3% other day. You wont see this guy Powell rAise rates 5% over inflation rate."

I agree, and not just under Powell. In the late 2010's, the economists at the bank I worked at had a consistent message that we will never see interest rates increase to levels we saw in the late 1900's as sovereign debt had increased to such a high % of GDP for most major countries that the interest burden that would result from rates over ~5% would be crushing. That somewhat limits the tools that the federal reserve and its counterparts internationally have to counteract inflation.

From: Wackjob
04-Jun-22
My favourite quote: "Just remember how dumb the average person is, and realize that half are dumber than that." lol

Anyone else see the irony in this quote?

From: DanaC
04-Jun-22
The internet is like Lake Woebegone, except *everyone* is above average ;-)

From: bill v
04-Jun-22
Definitely a slowdown in mfg. we have been way behind on lead times for 2 yrs now for more then one reason which includes; high demand, work force shortages ( temp and long term), and supply issues . Our backlog has dropped 60 to 70% in the last 3 months and lead times are down from 60 days to under 30 days. I believe some of the high demand was due to long lead times, a type of hoarding by ordering more to get product sooner. Lots of customers have recently pushed out orders or cancelled orders signaling to me that the whole train is slowing. I verified this with others in the industry. Now, hopefully this is just an adjustment of the ordering practices I mentioned. Guess we’ll see but, with this inflation it seems like we’re running towards a wall.

04-Jun-22
Matt Burke, can you tell me of a time in history when an inflation rate of 8+% rate was brought down by a 3% fed rate? Or even if they hiked the fed rate to the max 5% rate you mentioned, how does that bring 8% down? If you think it can, can you name one time in the last 100 years when there was a 3-5% lower fed rate than the inflation rate and the inflation rate dropped?

I can’t find a time it did going all the way back to 1960. Or does anyone else know of a time when this happened? I’d like to be a half glass full kind of guy when it comes to our upcoming economy.

From: Matt
05-Jun-22
Mike, I haven't frankly looked, but on the flip side the inflation we are seeing is largely due to transitory factors and is not as structural as it was in the Carter years. Much of it should correct over time absent fiscal policy to address it, so I don't think we have a good historical analogue to compare our current situation against. Much of what we are seeing was driven initially by COVID-related government stimulus and then by COVID/Ukraine-related supply chain shocks. Time will tell if these are short, intermediate, or longer-term issues, but my perspective is these can be corrected more quickly than broader macro-economic drivers.

I guess the way to out it is that the current reason for inflation may not be sustained so they may be more self-correcting and may not require big changes to fiscal policy to address.

From: Beendare
05-Jun-22
Matt hit on some of the causes….add free money to everyone, Inflating the money supply for over a decade and current terrible policy.

What is going to change? This admin just plays the blame game- with their focus on social issues and Climate policy.

One positive, We will see lower oil prices if the war ends…but otherwise the same bottlenecks are there and this admin is doing nothing to change it.

Food it’s going to go through the roof, it has only just started. If it gets to a panic stage that can have a ripple effect on many other things.

Folks that paid $300k over asking price for their homes recently will be in a negative equity situation- never good.

If you have a Pulse you can get a job right now but just wait when things get tight and lean and mean efficiency matters, then its a whole different ballgame.

Sounds like I’m chicken little but I’m actually an optimist. I predicted this early on while the talking heads called it transitory. Maybe it being overly Optimistic….or maybe lack of experience. Many of the current wall st geniuses have never seen it when money isn’t being pumped into the system. We will have to pay the piper for this flawed monetary policy at some point. FFWD, now even JPM’s Jamie Dimon says brace for a hurricane.

Save your money keep your powder dry and buy when there is blood in the street and you will come out of this smelling like a rose.

05-Jun-22
Thanks for answering Matt, I hope you are correct! Because we are now going in completely uncharted territory with an 8+% inflation rate and no ability to set the fed rate above about 5%. Inflation has never been tamed with these out of sync numbers. Maybe it will all work out just fine…

From: Dano
05-Jun-22
Real rate of inflation by 1985 standard is waaay over 8%.

Looks to me like they will just trickle ups rates slowly. If they don't start QT its not going help in short term.

Maybe after Nov when the GOP own the legislative branch the Dems may just jump rates in a big way. With Lunchbox having private meeting with Fed Chair you can be sure they were talking policy of Fed after the shellacking coming.

Would not surprise me to see them really pour the coal to drive economy into dirt in 2023-24 Dano

From: MPN
05-Jun-22
QT…Balance sheet reduction started this month with maturing bonds rolling off.

The bond market has done some of the feds bidding already, but as long as the supply side is constrained, especially with the staples, commodities or goods we all “need” , it will be painful. As inflation works its way through the system, those selling essentials vs discretionary goods will likely be less affected. ..demand for services currently seem to be preferred to discretionary goods, but that too will slow the longer inflation persists at these higher levels.

From: Dano
05-Jun-22
Agreed Dano

From: TreeWalker
05-Jun-22
We are in a recession though I expect will resolve by this time next year. All that is needed to confirm the recession is to wait for one more set of quarterly numbers. Inflation is going to take a couple of years to I head up sales for a medium-sized business and we were down 10% in 2020 compared to our record year in 2019. The phones stopped ringing the 3rd week of March 2020 then started to ring again in July. However, 2021 was a new record after a lot of hustle by my team. Q1 this year was a record Q1. Then, May was our biggest month ever.

We sell to businesses and lived through the slowdown in the early 2000s then in 2008 and now in 2020. We should do fine this year and next but are watching our inventory levels more closely than usual as we have 6 month lead times so unexpected growth or contraction hurts in different ways.

Shipping cost increase had been the main source of our cost inflation. We have successfully passed through the increases, so far, by raising prices. We are concerned sales fall if have to keep raising prices every 3 months.

06-Jun-22

Mike Ukrainetz's embedded Photo
Laughable mainstream headline! 3% to bring down 8%. They know they can’t put the inflation rate number in the same sentence as the interest rate or people might catch on…
Mike Ukrainetz's embedded Photo
Laughable mainstream headline! 3% to bring down 8%. They know they can’t put the inflation rate number in the same sentence as the interest rate or people might catch on…

From: RT
06-Jun-22
Beendare - indeed.

From: Dano
06-Jun-22

Dano's Link
This alone will kill all permitting like under Obummer.

This will be one of first things to be remove in 2024. Dano

10-Jun-22
Well, it’s good to see inflation easing. I’m sure GDP growth numbers released at the end of the month will be excellent too.

From: Beendare
15-Jun-22
Business update.

I have a couple businesses here in CA. The one was impacted by Covid...but now its humming along though now impacted by tight labor...in fact both of my businesses I cannot find enough folks to work. It seems that the easy money of stay home and get paid has a negative affect on businesses like mine where we need the employee to show up.

My construction business- I deal with the top 3% wage earners....so no problems there, plenty of work we just can't get them done.

There is the shortage of labor....and the supply chain is still a mess, not much solved though it may be easing a little. Prices have gone way up....one example is we build a lot of stuff with an Indonesian Hardwood, Ipe- its like Teak. It was $6/board foot for 1"x6" 18 months ago...now its $21....an over 300% increase. Thats fun to explain to clients that are thinking maybe a 10% or 20% increase that have been on contract at the old pricing. This usually triggers a redesign- always fun.

>

.

From: SteveB
16-Jun-22
I bought a home in 1983 when mortgage rates were 16%. I hit a 5 year balloon and it worked out as 5 years later I fixed it at 8.75. These rates are still outstanding and in large part responsible for some of the mess we are in.

From: ahunter76
16-Jun-22
My son has a concrete business & is doing fine but he has a couple relatives & a couple construction friends he can rely on for help when needed. Other wise, no one wants to work. My wife & another gal (Photographers) started up & studio just b/4 Covid. They were doing awesome for that 6 months & then Covid hit.. Sadly, they closed the doors last fall. They are still booking sessions but without their studio & that has hurt.. People are not so giving of cash for those "little extras" in todays economy.

From: tobywon
16-Jun-22
I don't understand the labor shortages, are there really that many people out there that stopped working and can remain not working this far after all the easy money? I'm uninformed I guess, I just keep working and do what I need to to pay the bills. Maybe unemployment has been extended that far out, I don't know. I'm assuming most people will have to get back to earning a living eventually. I'm seeing many businesses that I deal with for work that are short-staffed, no one wants to work. Saddens me to think there are that many lazy people out there. I don't get it, but then again it doesn't surprise me either.

From: SteveB
16-Jun-22
I bought a home in 1983 when mortgage rates were 16%. I hit a 5 year balloon and it worked out as 5 years later I fixed it at 8.75. These rates are still outstanding and in large part responsible for some of the mess we are in.

16-Jun-22
Labor shortages have been in the mix for awhile. For most regions of this country. Long before Covid. And, paying the labor force free money through stimulus and entitlement only ensures it persists. Kinda makes you wonder about the people in charge just signing the budgets.

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