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We are we in the economic cycle?

greenlander1

Curious as to what the folk that have seen multiple cycles maybe even before the financial crisis in 2009 are thinking here.   the real estate/ construction prices are insane now. 

I know sample size of 1 but before 2009, commodity prices went nuts like now and I remember construction costs went crazy also.

 
Aug 10, 21 3:52 pm

Yes we are in an economic cycle.  We always are.

I suggest you do a bit of reading on the Economic Cycle theory - aka the fluctuation of the economy between periods of expansion and contraction.  You'll soon see that that no one really knows what's going on and it's all speculation.  



Aug 10, 21 5:19 pm  · 
4  · 
Non Sequitur

Or is it a cycle of economics? A mobius triangle of d
ead cat bumps perhaps?

Aug 10, 21 6:49 pm  · 
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I think it's more like an idiot trying to make money.

Aug 10, 21 7:13 pm  · 
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greenlander1

I guess then people like Sam Zell just got lucky all these years in your opinion.

Aug 10, 21 6:30 pm  · 
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JLC-1

no, he's just old and been doing the same thing for 60 years, it's called experience. but he's not an architect, he only plays with money.

Aug 10, 21 6:41 pm  · 
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green - why not ask and actual economist instead of an online form of architects?

Aug 10, 21 7:13 pm  · 
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doG put economists on Earth to make weathermen feel better about themselves.

Aug 10, 21 7:30 pm  · 
5  · 
greenlander1

Architecture billings index is one of the few leading indicators on the economy bc that work predates much larger capital being deployed. If one doesn't give some thought of where they are in the cycle, they are doing their finances a disservice.

Aug 11, 21 11:19 pm  · 
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greenlander, I’m no expert. I’m 54 years old. But I feel like while certain things predictably reoccur (human nature is predictable), that as a global economic society facing a global climate crisis *nothing* is predictable right now. 


I admit the IPCC report, along with unprecedented construction demand, has me very nervous.

Aug 10, 21 11:01 pm  · 
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greenlander1

Yeh I have some architect friends who are 'tucking' some cash away, not expecting any imminent crash but building a buffer. For sure, everyone I know in real estate investment/ development have taken their foot off the gas. Very minimal new investments.

Aug 11, 21 11:06 pm  · 
1  · 
greenlander1

Think right now, the futures markets are pricing maybe 75% of rate increase in 2022. Theoretically a small increase shouldnt cause much damage to the economy but who knows.

Aug 11, 21 11:22 pm  · 
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chris-chitect

If you want bleak and depressing, watch videos featuring Chris Hedges. He's a journalist that has reported on the collapse of governments and their societies, spending time in Eastern Europe.

He believes America's days are numbered, and when it goes down, it's taking the western world with it. 

Empires usually follow the same cycles. The final stage is when they build ridiculous monuments and display excess (billionaire space race is a good example) and everyone lines up to rob the state and bleed it dry (tax loopholes and bailouts). Your leaders will distract you through bread and circuses, which is just replaced with Instagram and Netflix. Seriously, how was Tiger King as popular as it was?

Our own professions are based upon constant growth. If you've ever played SimCity or CitySkylines, you just want to keep growing and growing. In the real world it's just not sustainable for a long period of time.

Looking around, the housing market is out of control, we won't do enough about the environment as our SUVs are more comfortable, and many of us have lost empathy for those that got a bad start in life or have circumstances that they can't get out of (opioid addiction being a big one).

That being said, there's hope, there has to be. 


Aug 11, 21 2:27 pm  · 
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JLC-1

.

Aug 11, 21 3:20 pm  · 
4  · 

Pepe Escobar and Michael Hudson have a clear view and don't mince words. Hedges was a war correspondent for the NYT who quit after being reprimanded for writing a piece critical of the Iraq War.

Aug 11, 21 6:13 pm  · 
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Le Courvoisier

We're in hell, right? 

Aug 11, 21 2:33 pm  · 
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chris-chitect

Given the second heat dome that the pacific northwest is experiencing, I'd say so!

Aug 13, 21 3:33 am  · 
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reallynotmyname

We are at a point in a cycle where there is a real shortage of people to fill jobs at architecture firms.  I'm seeing very weak performers in my community getting multiple job offers.  Employers are including salary amounts in their job listings, which they never used to do in my region.  Salaries used to be kept under wraps so the employer could try and get a candidate for cheap.

Aug 11, 21 4:59 pm  · 
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greenlander1

Yeh my wife is in tech and they just gave her a surprise 25% increase after 4-5 mo on the job so she wouldn't leave. It's nuts right now.

Aug 11, 21 11:24 pm  · 
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SlammingMiruvor

Wow, it's almost like over half a million people died within the last year!

Aug 12, 21 9:58 am  · 
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archeyarch

we are in an inflationary phase since the last crash in 08, with ever low interest rates and money printing. they have tried to raise rates at times, but the markets react downward, and this would lead to a deflation/recession. i believe this is similar to mmt, or, maybe the weimar hyperinflation

Aug 12, 21 1:23 am  · 
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randomised

we are so to speak dancing on the volcano...

Aug 12, 21 3:47 am  · 
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greenlander1

A tax lawyer friend of mine says a lot of his high net worth clients are selling down assets and raising cash recently.  Also know someone very seasoned in bond advisory who believes recession is coming in 18-24 mo.



Apr 13, 22 10:47 am  · 
1  · 
b3tadine[sutures]

They're selling down because a wealth tax is coming, and it's harder to get at wealth of you don't have taxable assets.

Apr 13, 22 11:27 am  · 
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Maybe, maybe not. The yield curve has apparently been doing some inverting in the last couple of weeks, and historically when the yield curve has inverted for at least a quarter, that has preceded a recession by a little over 12 months ... sometimes longer like for the great recession. Keep an eye on it the next few quarters to see if it holds.

Also, as pointed out a few years ago in the next recession? thread, the ABI is still in good territory so there's that to indicate we have some time before the next one. March ABI numbers should be released in a week.

All that being said, I'd anticipate some economic slowing down ... maybe a recession ... in the next few years as the Fed raises interest rates.

Apr 13, 22 11:47 am  · 
3  · 
greenlander1

yep the raise in rates will dampen the low cap rate environment. How much who knows. That was the big reason why many were selling some assets.

Apr 13, 22 12:31 pm  · 
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greenlander1

and that pesky yield curve too. Lotta ppl mention that leverage isn't anywhere near where we were pre GFC but cap rates are insanely low, lower than back then. A big jump in rates would cause a big jolt.

Apr 13, 22 12:36 pm  · 
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greenlander1

.

Apr 13, 22 12:36 pm  · 
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shellarchitect

this time it’s different because we are much smarter than we used to be, also we now have computers and the internet so the boom and bust cycle can’t happen again

Apr 22, 22 10:14 pm  · 
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rcz1001

Not sure about any of that but you may know, deep recessions don't happen every loop in the boom/bust. Sometimes things are subtle but it doesn't mean another bust/depression isn't around a corner in the near future. Now, we had this pandemic which was in some respect a technical recession by effect so there is a post-pandemic 'boom' period but that might not be long or result in a massive decade(s) long trend of great times. There will be future slow downs. I have seen more client inquiries and all in the last year or so and this may continue overall with brief intermittent slow downs that are part of our regular seasonality where I am. There's times of the year where clients tends to not contact for services but there are other times of the year. But there are also patterns and trends when looking at things over a 10-20 year time frame and see how things are going. I suspect that we may have a few good years of varying levels of good but that doesn't mean good years is universal. Even in good years for architecture can be bad years for some others. What EA said makes some compelling points. The past 5 years has been irregular and in ways unprecedented in the last 50 years.

Apr 23, 22 2:53 pm  · 
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Volunteer

A severe recession is baked in. The Federal Reserve and Treasury could have raised interest rates several times moderately over the past year and perhaps contained the recession to a mild one. Now it is too late. A massive rise in the interest rates to break the inflation and the unavoidable severe recession as a consequence is most likely. Just my opinion. Biden's handlers coming up with ever more massive spending ideas is just insane. His inflation tax has already cost each family $3,500 to $5,000 in 2021 alone. 

Apr 23, 22 6:04 pm  · 
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greenlander1

Looks like Fed is inclined to raise rates 50-75 bps next meeting and maybe again in fall.  My guess is the Fed will want to drive things into a short, mild recession to cool off inflation as opposed to raising rates much higher than the Fed rate of 3%.


Jun 22, 22 2:12 pm  · 
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