Economy

[earthling]

April 2020 metro jobs data released per industry.

As expected KC metro's Leisure/Hospitality took biggest hit, down nearly 50% from Feb to April and from previous April. Construction actually shows growth compared to previous April, the only industry.

May on through summer expected to show harder hit with office jobs while some hospitality jobs start to return.

KC metro took a 10.6% hit overall compared to previous April, better than US avg. NYC took a 20% hit overall. Missouri took an 11.3% hit and STL 11.5%. Michigan appears to have taken hardest hit with 23% decline.



https://www.bls.gov/eag/eag.mo_kansascity_msa.htm

[earthling]

An Open Table survey says that 25% of restaurants likely won't return. KC metro may fare a bit better given overall less impact than US avg but with servers often currently making more on unemployment, could be hard to attract workers.

https://www.marketwatch.com/story/1-in- ... =home-page

[earthling]

Covid-19 sends KCI passenger traffic into a nose dive in April
https://www.bizjournals.com/kansascity/ ... lines.html

Slightly more than 42,000 passengers departed from or arrived at KCI in April, according to Aviation Department statistics. That compares with more than 467,000 passengers, each, departing and arriving at the airport the previous year.

[earthling]

As expected, office workers will be hit harder next as service industry returns..

IBM laying off thousands, seeking “flexibility” during COVID-19 crisis
https://arstechnica.com/information-tec ... 19-crisis/

And many who avoided furlough/layoffs are hit with pay cuts. Consumer confidence will get worse when Federal aid ends.
https://www.google.com/search?q=pay+cut ... 80&bih=635

[aknowledgeableperson]

https://www.msn.com/en-us/news/us/about ... plocalnews

"About 1,000 contract employees of a federal agency have received notice that their jobs face elimination in what would be one of the largest mass layoffs of the year for the Kansas City area."

[earthling]

As of April...
Missouri's 'official' unemployment rate is among lowest at 9.7%.
Kansas is a bit below US average at 11.2%.
US Avg is about 14%.

The 'real' unemployment is quite a bit higher as there's a lag in unemployment claims, some don't bother to report, and the labor force shrinks because many give up or don't report looking even though they lost their jobs. The real labor force is likely much higher. Historically April labor force is typically higher than Feb but isn't now.

Metro numbers should come out soon.

All states...
https://www.bls.gov/regions/home.htm

[earthling]

https://fortune.com/2020/05/22/unemploy ... es-lowest/

[earthling]

^Hope for the best, prepare for the worst. The downhill snowball effect is just getting started. There aren't any indicators to suggest a return to where we were in 18 months. Consumer confidence will probably be low at least until there is a vaccine but even then there's still a snowball effect that we haven't' seen since the Great Depression.

The 2008 recession wasn't anywhere close to this and took over 6 years to get back to 2008 levels in terms of jobs. And the unemployment rate took even longer to recover where it was because the labor force continued to grow.

The difference is that;

1. Our economy was already weak leading up to the 2008 recession.. instead of the barreling train that it was just a few months ago.
2. THIS economic situation was entirely man made. It's the result of our decisions. THAT can be undone rather quickly (IE: By reopening).
3. Please stop using verbiage such as "Until there is a vaccine" and spreading this false sense that there WILL be a vaccine. There likely will NEVER be a vaccine. That's the simple reality of science. Hearing people talk about vaccines as if we can magically formulate one from thin air at our discretion is ridiculous. We don't even have a foolproof method of testing for the virus right now. Thinking that we'll somehow create a vaccine for an RNA based virus in the next few months is absurd and completely out of touch with reality. Treatments, sure. But vaccines are a whole different ball game. We have millions of treatments for diseases all over the globe, but we only have 26 vaccines. TWENTY SIX. Wrap your head around that. Do people NOT realize these simple facts and what they mean? We simply do not have the answers or the capable to create the answers to every medical question out there. It is 2020. Not 2398423948. We are only a few years removed from wiping our asses with toliet paper. Just kidding.. We're absolute animals. We are not an advanced species or society. We are crude. Basic. Raw. Our science is politically charged and unimaginative. We are constrained to these realities. Welcome to Earth, 2020. This is going to be as common and ever lasting as the seasonal flu.

Agree with all of that but doesn't alter my points about economy returning in 18 months being a very optimistic view. The vaccine comment was about consumer confidence, which is partly relied on perception. Agree there might not even be a working vaccine (almost pointed that out) but many are expecting one and confidence may not return until there is one (or the virus is under some form of control and out of the news) - neither might not happen in 18 months.

And agree we made a decision to kill the economy with perception it was the only way to save lives but the snowball effect may be out of control of the man-made trigger.

The economy and stock market are partly driven by emotions. Is why I pulled out of the market and into private equity. The bottom line is that it would be highly optimistic thinking that economy will return to where it was in Feb in 18 months. Could happen but there are no indicators leading that it would occur that soon and we've never experienced anything like this with such a cross-dependent globalized economy.

So do you think there will be a V-shaped return? What's the case for that?

[earthling]

^Hope for the best, prepare for the worst. The downhill snowball effect is just getting started. There aren't any indicators to suggest a return to where we were in 18 months. Consumer confidence will probably be low at least until there is a vaccine but even then there's still a snowball effect that we haven't' seen since the Great Depression.

The 2008 recession wasn't anywhere close to this and took over 6 years to get back to 2008 levels in terms of jobs. And the unemployment rate took even longer to recover where it was because the labor force continued to grow.

KC might fare better than US avg but maybe not with hotels given occupancy wasn't all that great before COVID due to so many hotel rooms coming online. Will become more difficult to compete with other cities for conventions too and we don't understand the airline impact, which is clearly more severe than any event in its industry. And car rental impact. Hertz is over 100 years old and filed for bankruptcy out of nowhere, putting auto industry in jeopardy with possibly liquidating 100K-150K fairly new used cars on fire sale. Such snowball effects we haven't thought of yet will likely continue for many months.

We haven't seen anything like this so who knows. No one can predict how long it will take to return to where we were. Could highly optimistically be within a couple years but wouldn't be surprising if over 15 years.

The other thing to consider regarding 2008 recession: the congress at the time was not interested in having the economy recover quickly. I would hope that the current crisis might have a different result, but won't know until after the election.

^There were stimulus packages during the 2008 recession and essentially did work but took many years for recovery. An 18 month return could happen but many economists say it's highly optimistic as we are now experiencing unforseen snowball effects across broader industries than 2008 recession. A 15 year return might be more realistic than an 18 month return but nobody knows.

There are already many indicators that Scenario 2 is in progress even though Congress and Fed have been attempting stimulus actions (that dwarf 2008 stimulus). And if even US can stimulate a path for recovery (adding more debt/deficit or printing money), the US is still dependent on a global economy and we don't know how rest of world will recover.

[im2kull]

So do you think there will be a V-shaped return? What's the case for that?

Here's a quick, simple answer: Take a look at this forum.


What happened in 2008?
-Everything stopped. Everything.
A Moshe Safdie masterpiece in the richeset part of town couldn't survive.
People with degrees were in McDonalds begging for jobs.
Noboby was hiring. No bank was lending. No mortgage wasn't being defaulted on.


What is happening now?
Virtually nothing is stopping. Everything is still rolling on. Some projects are even increasing in size.
Look at the level of investment continuing. Projects in poor areas are continuing unimpeded.
JOBS are being offered left and right for those needing work. Hiring has continued at a rapid pace.
The airport, the data center, Muehlbach, River Market, CMH, River Front, W&R, etc, etc, etc.

Have we had any real casualties yet?


IF there really was going to be a lagging, slow, drawn out recovery then you'd see the construction industry lagging, slowing down, etc accordingly.



Should I even mention the still scorching real estate market in KC?

[earthling]

^I meant nationally/globally but KC does seem to be less impacted so far. See first post in this thread, construction jobs actually went up in KC in April. We'll have a better feel over next few months. April was hit mostly with service industry jobs but office workers are expected to be hit over next few months. KC did take a 7% hit in pro biz jobs in April. Time will tell.

[grovester]

The 2008 stimulus got watered down to get passed, then congress pivoted to austerity. That's why the recovery took as long as it did.

This one so far has much more support though that will wane over time. I tend to be more optimistic compared to 2008, as there was no financial market structural collapse.

[earthling]

Will be interesting to see what happens when benefits and breaks from bills start to drop. Many service industry people are making more from unemployment than working. Many millions are skipping mortgage payments and other bills. That will come to an end at some point. Then you have many working who took pay cuts. Despite the heavy handed stimulus, consumer confidence dropped significantly in a short period. Could decline further (or stay flat) as benefits drop this summer, which would cause another snowball effect.

We're already nearly half way in confidence drop compared to last recession in just a couple months...

[earthling]

"A staggering number of laid-off workers are receiving more money in unemployment benefits than they did from their jobs"

Two-thirds (68%) of jobless workers would bring home more money from their state unemployment insurance and $600 weekly supplement from the federal government than they would on the job, according to University of Chicago researchers.
...
Approximately 40% of all jobs paying less than $40,000 per year in February were gone in March, according to Federal Reserve Chairman Jerome Powell.
...
For example, a janitor at a still-open business might not get hazard pay, but an unemployed janitor could get 158% of his or her prior wage, the study said.=

https://www.marketwatch.com/story/a-sta ... =home-page

[shinatoo]

"A staggering number of laid-off workers are receiving more money in unemployment benefits than they did from their jobs"

Two-thirds (68%) of jobless workers would bring home more money from their state unemployment insurance and $600 weekly supplement from the federal government than they would on the job, according to University of Chicago researchers.
...
Approximately 40% of all jobs paying less than $40,000 per year in February were gone in March, according to Federal Reserve Chairman Jerome Powell.
...
For example, a janitor at a still-open business might not get hazard pay, but an unemployed janitor could get 158% of his or her prior wage, the study said.=

https://www.marketwatch.com/story/a-sta ... =home-page

Strong case for why we should raise the minimum wage.

[im2kull]

"A staggering number of laid-off workers are receiving more money in unemployment benefits than they did from their jobs"

Two-thirds (68%) of jobless workers would bring home more money from their state unemployment insurance and $600 weekly supplement from the federal government than they would on the job, according to University of Chicago researchers.
...
Approximately 40% of all jobs paying less than $40,000 per year in February were gone in March, according to Federal Reserve Chairman Jerome Powell.
...
For example, a janitor at a still-open business might not get hazard pay, but an unemployed janitor could get 158% of his or her prior wage, the study said.=

https://www.marketwatch.com/story/a-sta ... =home-page

Strong case for why we should raise the minimum wage.

Or abolish financial unemployment benefits.

[swid]

That's the can-do "I got mine, so eff you!" spirit!

[earthling]

Trends as states start to open back up...

https://www.marketwatch.com/story/more- ... =home-page

[grovester]

https://www.bloomberg.com/opinion/artic ... f=JAr0VHhS

Krugman sees more of a V shape.

[earthling]

Can pick and choose economists. Take a look at the average. The bottom line though is that nobody knows. We haven't seen anything like this with the heavy global dependency US now has. If the stock market can hold over 25K it might help consumer confidence to some degree. But it's emotional as usual so might see more swings. Hope for the best, prepare for the worst.

Just 1 in 10 economists expect V-shape return...
https://www.ft.com/content/113529d8-cef ... 12b194f685

Don’t Expect A Quick Recovery. Our Survey Of Economists Says It Will Likely Take Years.
https://fivethirtyeight.com/features/do ... ake-years/

Nike Swoosh is a common term...