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next recession?

midlander

this thread is for making bets on the next recession, regarding both timing and impact on our charmed profession.

i think it's starting. i've had way too little to do for the last 2-3 months, though everyone insists it's just bad luck on my projects and we're doing fine (big international AE firm). it's been a bit over a year of all-out desperate hiring, anyone with a degree has a chance; anyone with experience gets an offer.

So I give it 3-4 months, October's always bad for markets. Recession 2019 is coming, probably a few years later than most of us pessimists expected.

impact: modest, not career crushing. no major firms shut down, but everyone will be trimming fat and every city will lose a few old hacks who've been hanging on since when studying with Eisenman meant something.

feel free to object vigorously if you know in your heart i'm wrong! i'll still ignore you and dump my stocks for cash.

 
Jul 1, 19 11:03 am

3 Featured Comments

All 17 Comments

flatroof

Economy will stay propped up until after the election. Then the house of cards will fall after trump is re-elected.

Jul 1, 19 11:09 am
BlueMoon

2nd or 3rd quoter of 2020, Trump will not be re-elected. Slow decline vs. crush of 2008

Jul 1, 19 11:42 am
archanonymous

I'm not going to prognosticate an exact date, but it sure looks like we are heading that way.

Seems like there has historically been a 3 month - 18 month lag between sustained yield curve inversion and the true onset of recession (something of a melt-up or dead-cat bounce as they call it).

I'm not switching jobs til it happens (two years seems like as long as this could sustain itself and I can hold out that long) and though I'm still heavily invested in stocks in my tax-advantaged retirement accounts, everything else is in cash currently.

Jul 1, 19 11:49 am
BlueMoon

there is a talk about dollar devaluation, too...

Jul 1, 19 12:05 pm
Featured Comment
thisisnotmyname

It has definitely slowed down in my location.   We are seeing the big firms in town fighting like crazy over small government jobs they would have turned their noses up at a year ago.   

Jul 1, 19 5:39 pm
axonapoplectic

We’ve been getting more 5-10 year range planning exercises lately.

axonapoplectic

I think the automotive industry will take the biggest hit in the next recession. 


I think in the superstar cities on the coasts the recession will barely register, whereas there will be even greater pain in the middle of the country. 


My guess is this fall we will see cracks and then by next summer it will be apparent.

Jul 1, 19 6:19 pm
Susz

I would guess at the opposite: “superstar” cities in the past experience recessions the hardest. Every senior architect I’ve talked to has said as much to me about the recessions (plural) they’ve experience. Less jobs> More competition between in a saturated architecture market >less hiring positions as companies going lean to
make it through

thisisnotmyname

It really depends on whether or not there is overbuilding happening in the superstar city. A lot of the superstar cities of today have land use and geographic situations that somewhat limit the ability of developers to build too much.

archi_dude

No idea when but let’s just say there’s no way in hell I’d even think about switching jobs until the next one happens. At least I’m happy where I’m at now :). 

Jul 1, 19 8:01 pm
curtkram

there's a lot of competition for construction workers, making construction costs too high.  I think there are developers that want to build, but are waiting for a more advantageous labor market.  I think costs for construction materials are running high as well.  If the economy starts slowing, it might be just what we need to get the economy moving :) 

Jul 1, 19 9:08 pm
archanonymous

Agreed on the labor costs. We really need something to happen on affordable housing, and that thing is realizing it's all tied to labor costs and supply.

wurdan freo

When someone is making $15/hour at mcdonalds, you have to pay at least $20/hour for a freakin' grunt on site. That $20 will actually cost you around $35 and that's just for some hack to sweep the floor and move lumber around. Engineers, Interior designers, all billing at $120-$200 an hour. So it's not just the trades guys. Worst culprit is government fees. Built a duplex last year... total construction costs were 600k. 100k went to the government in the form of permits, fees and plan review. Labor costs are probably only 30-50% of the construction cost. If labor goes down there will be a savings, but its not going to cut the price of a house in half.

archi_dude

Don’t forget the costs of endless redesigns to satisfy planners who fancy themselves architects and demand 80% CD’s for plan review and approval of endless “design overlay zones.”

curtkram

archi, I thought that was just me. So it's this bad everywhere?

Non Sequitur

Curt, I have an extra layer on top of that too. Working in the (Canadian) capital, Anything that might be seen whenever the queen decides to visit gets an additional focus group. I’m only slightly kidding.

Non Sequitur

And that’s “seen” as in visible from the motorcade, not specifically a site that will be visited.

midlander

ha i thought that was only in china, where all the buildings in a district get repainted in anticipation of the president driving by on the highway...

Non Sequitur

The city cut down and replaced healthy trees along a boulevard just because some royal wanker was passing through.

Featured Comment
OneLostArchitect

No signs of slow down here. Trump will most likely get re-elected. Has anyone seen the debates? So don’t expect a recession till a Democrat gets back in office in 2024. 

Jul 1, 19 9:16 pm
archanonymous

I don't think even Trump and McConnell can figure out how to juice the economy for 6 more years.

Koww

debates are so cringe they're unwatchable

tduds

They're no worse than they were in 2016 (on either side).

They should be re-branded as "talking points speech with others onstage, and sometimes interruptions."

jla-x

+EA

sausages

Just wait until Trump is reelected, then everything will come crumbling down, though we are quite busy at my firm (located in the midwest). Granted, we do a lot of state university work though, so we are usually pretty steady. 

Jul 2, 19 2:34 pm
archi_dude

I like it switched from when trump gets elected in 2016 to reelected 4 years later.

jla-x

Funny how that works.

( o Y o )

For 60% or more the economy has been in free fall for the last 20 years. 

Jul 2, 19 9:48 pm
thisisnotmyname

Overall, the USA economy of today seems very bifurcated. Healthy industries are consolidating into a handful of locations and everywhere else is stagnant or in decline.

Featured Comment
Rusty!

Architects don't really have to double guess this one. Just look up Architecture Billing Index. If both upper numbers fall below 45, then in about 9-12 months you will have a problem. ABI has been ridicilously accurate. Both in 1999 and in 2008. In 2008 it dipped below 40. That works out to be 20% decrease in work ahead. And it stayed below 40 for months. 

Right now things are just holding steady. Market is neither increasing or decreasing. 

Jul 3, 19 9:50 am
Taso

It’s definitely coming. Our office has been switching their gears to Asian markets again. 

Aug 13, 19 10:39 pm

Bump...

While not quite below the magic number 45 that Rusty! mentioned above, the ABI dropped below 48 for both billings and contracts in August. Next update to be released on October 23rd.

Seeing that plus the following in this article in Architect Magazine was enough to get my attention (emphasis mine):

"Average total compensation across all architectural staff positions averaged in excess of $92,000 at the beginning of 2019, up more than 6% per year from early 2017 levels, according to the recently released 2019 AIA Compensation Report. This pace of growth matches the strongest annual rate seen over the past two decades. However, it is a cautionary note that the last times architect compensation reached an increase of 6% per year—1999 and 2008—the economy and the construction sector were either starting to enter national economic downturns or were just about to do so."

Oct 11, 19 7:26 pm
axonapoplectic

“ Regionally, firms in the Midwest bore the brunt of this recent slowdown. Firms in this region reported a reasonably steep decline in August on top of a comparable setback in July.”

won and done williams

Record low unemployment and wages ticking higher is somehow a bad thing?

Depends on if you're the one looking for work or the one looking for workers. Either way, how much longer will it last is the question most people are interested in.

greenlander1

Generally speaking when construction costs begin to spike, we are close to the latter end of the cycle.  One thing that is really different this time as opposed to the last cycle is leverage utilized by project owners is much lower.  Even now I am seeing pretty stringent underwriting by banks.  So if things slow down seems like we are headed more towards a slow drip down rather than a dramatic crash.

Oct 13, 19 12:49 pm
RosaBreed

I agree and it is on its peak. The situation is becoming more complicated day by day. It's gonna hit in any time soon.

Oct 14, 19 3:58 am
Chad Miller

We're all doomed and I'm building a house.  Well f*#k me.  

Oct 14, 19 11:15 am
GridBubbles

Cheaper labour for you Chad.

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