Economy

[billbenson]

Been a few economy threads lately, but I thought I'd start a new one on this.

I have a lawn care guy. Pretty common in Florida. $25 to cut my lawn. He will do basic handyman stuff as well. He put up a section of fence for me and did a good job.

I want him to do some basic spring trimming of bushes etc. He told me he that he will need to wait until he has a new helper. The one's he has had have quit for real jobs! Seems like the economy has picked up here as well if unskilled laborers are getting real jobs??

[tmerrill]

That's assuming the help was an unskilled laborer. The help might have been someone with skills who took the lawn care / handyman job to make ends meet until the economy got better or he found a job doing what he is good at.

[billbenson]

No, I'm saying he's having trouble keeping unskilled labor when it has been easy in the recent past. His unskilled labor are finding stable better paying jobs.

[huggytree]

i heard on the news that 86% think were still in recession....i think in my area people are back to a recession way of thinking....its been great until about a month ago when the calls just stopped.....now its almost as bad as it was mid summer last year....Every call i get is like pulling teeth to get them to sign or spend...

this is somewhat typical in the spring, but this year seems 50% worse than normal....i made awesome profits over the winter....now im giving them back and working 11 hours last week and most likely 8 hours this week.

2 month ago i would have said 'the recession is over'....but now it 'feels' like its back

gas prices are dropping...that will help

[vangogh]

Bill I think things have been improving. I don't have any personal stories to share, though most of the news I've seen the last few months would indicate we're moving in the right direction, though perhaps not as fast as we'd all like. Florida was hit harder this time around so maybe the state is coming back a little quicker now since it had so much room to grow.

Here's month over month data from the Department of Labor (http://www.bls.gov/eag/eag.us.htm). March wasn't particularly great thought. Job reports were weaker than expected (http://www.nytimes.com/2012/04/07/business/economy/us-added-only-120000-jobs-in-march-report-shows.html?pagewanted=all). I'm not sure if that was completely unexpected though.

[vangogh]

I hadn't seen this yet when I posted above. It looks like the first signs for April are coming in positive. Manufacturing is up (http://www.bloomberg.com/news/2012-05-01/u-s-april-ism-manufacturing-report-on-business-text-.html) and the news sent the Dow to it's highest level since sometime in 2007. The article I just linked to says the PMI (Purchasing Managers Index) numbers suggest the economy has now grown for 35 consecutive months and that real GDP grew 4.1% annually during April. The PMI was 54.8 and anything above 50 is an indication that the manufacturing economy is expanding. 16 of 18 manufacturing industries reported growth in April.

[huggytree]

average home price in Milwaukee just went down 13% over the past year...largest drop yet

i think this recession thing is different in each area....the midwest was hit last and not hit as hard.....i think were still having issues....homeowners that call me are just searching for the cheapest way to handle everything....i just had one today thats hiring 2 plumbers for a project....one to do the tub (me) and another to do the sinks,faucets and toilet. we both bid on the project and they are cherry picking the tasks...there hiring 2 people to save $150 i assume.......ive never seen that before...it shocks me...they dont realize they will also have to pay for (2) permits which cost $70 each...so they may be going through this to save $80 in the end

this time of the year seems to attract the frugal buyer...ive always found that....then in the Fall the big spenders come out...thats been consistent for all 5 years ive been in business

1 month ago i would have told you the recession is over in my area......now id say were still in it.....maybe in a month things will switch back again

[vangogh]

It's most likely different in different areas. I wouldn't say one bad month means we're in a recession though. I think a recession is generally defined as 2 quarters or 6 months of a down economy. One bad month is just one bad month. By definition the recession ended somewhere in late 2009 or early 2010. The economy has been growing since then. It's just not growing as quickly as we'd all like to see, but it's been consistently, albeit slowly growing for more than 2 years.

Early last year it looked like it might pick up steam, but I think the troubles in Greece slowed things back down. The year's first quarter also made it look like the recovery would grow stronger. March slowed things back down and we'll see what April brought when the numbers start coming in. The one I saw the PMI looked good. Hopefully the rest will follow.

Still those are national numbers and it wouldn't be surprising if some areas are doing better than others.

[huggytree]

there's a difference between actually being in a recession and people 'feeling' like were still in a recession.....86% of people 'feel' that were in a recession....so that 'feel' becomes reality

their spending habits change......in my opinion that 'feeling' is whats causing my extreme spikes.....they feel good=they spend all the money they are hording....they feel bad 1 month later=they go back into survival mode..spending the minimum they have to

[billbenson]

My original point is unskilled labor jobs are coming back, at least here. Florida was one of the hardest hit on both jobs and housing. Particularly in housing. But if unskilled labor is coming back, I'd say that's a good sign. Also remember we are going into our off season. Winter tourism is a big industry here and we are going into summer.

[lucas.bowser]

Well, there are really two thing that could have happened. You could have an improvement in the economy, or a reduction in the size of the unskilled labor force in general. As a general rule, a lot of the unskilled labor population has an ability to be transitory, i.e. when there are no jobs available they can move somewhere where they have better prospects. If you have a significant local exodus that has occurred in the unskilled labor market, you may be seeing the natural by-product of those moves.

[billbenson]

Well the guy that told me this specifically told me people working for him were finding permanent jobs paying more. Another thing that could affect this is a lot of the illegal immigrants have left the country.

[lucas.bowser]

Right. And the population he would have drawn from for their replacements has shrunk. Even during a down economy there is always turnover at all levels of organizations, so it is not surprising that his people might be able to find jobs over time, especially since they are currently working for/with him. Immigrants have certainly left, though I'm not convinced that its at a meaningful level. I just think their better at keeping their heads down right now to avoid scrutiny during the economic downturn. At least based on what I'm seen in Eastern PA.

[billbenson]

Right. And the population he would have drawn from for their replacements has shrunk. Even during a down economy there is always turnover at all levels of organizations, so it is not surprising that his people might be able to find jobs over time, especially since they are currently working for/with him. Immigrants have certainly left, though I'm not convinced that its at a meaningful level. I just think their better at keeping their heads down right now to avoid scrutiny during the economic downturn. At least based on what I'm seen in Eastern PA.

My wife is from Central America and has had a number of jobs dealing with illegal immigrants. We are very familiar with the illegal immigrant situation, at least in central Florida and know quite a few. Most "real" companies started checking documentation very thoroughly ramping up over the last two years or so. You will still find some companies that are looking the other way. I know a girl who is illegal and working at two different McDonalds. Others still here are working for themselves doing things like lawncare. I'm sure there are quite a few working in farms, but they frequently have visits from immigration officials. Lastly, some of the latino's here illegally are here because part of their family is here legally and don't want to leave, so money isn't the only driving factor.

Within their own circles they are are talking about how many people have left and talking about leaving as well. So I think a very meaningful level have gone home. That, however, didn't just happen so I don't think that is what is happening with the shortage of unskilled workers here.

[vangogh]

86% of people 'feel' that were in a recession

The thing is 86% of of people don't feel like we're in a recession. The consumer confidence index for April was at 69.2 (http://www.conference-board.org/data/consumerconfidence.cfm), which means the majority of people are feeling positive about the direction the economy is heading. It's only about 30+% that think business conditions are currently bad. That's still a lot, but it's nowhere near 86%.

The economy in the U.S. has been growing for about 2 years now. It's not growing particularly fast, but it has been growing consistently. A couple of times it appeared as though the pace of growth might quicken only to fall back again. That's pretty much where we are right now. The first quarter of 2012 looked very promising. The 2nd quarter has felt like a step back so far. We'll learn more tomorrow morning when the Labor Department releases the April employment report. Early indications this week are suggesting 170,000 jobs were added in April, though that likely won't lower unemployment below it's current 8.2%


there are really two thing that could have happened. You could have an improvement in the economy, or a reduction in the size of the unskilled labor force in general.

True. That's why it can be hard to draw conclusions from individual stories and small sample sizes. Quite a few of us here have been saying business has been good for us this year. I take that as a good sign, but even together we're still a small sample size. I've pointed this out about my own business before. One or two projects could be the difference for me between a good year and a bad year. I don't think that's enough data to say anything significant about the economy at large.

[lucas.bowser]

True. That's why it can be hard to draw conclusions from individual stories and small sample sizes. Quite a few of us here have been saying business has been good for us this year. I take that as a good sign, but even together we're still a small sample size. I've pointed this out about my own business before. One or two projects could be the difference for me between a good year and a bad year. I don't think that's enough data to say anything significant about the economy at large.
True. Or you could just be offering exceptional service at a time when people have options in regards to supplier. I think a good example of this is my neighbor who does book cover art for major publishers. When we were talking in the last year he told me he's had the best couple of years ever, even though as a whole people who do what he does have suffered quite a bit. But then, he does very good work (some bigger name authors request him exclusively.) So even though there are lot's of people looking for work and depressing prices, the fact that fewer books have been published has made it easier for him to stand out in the crowd as someone who does exceptional work because he doesn't have to fight to be seen among the mediocre.

[vangogh]

Yep. There can be so many reasons why someone is doing better or worse that you can't really draw any conclusions. You're right it could be someone offering a better service for why they're having a good year and similarly offering a poor service for having a bad year. To me this is good news as it means I have control over my business regardless of the economy at large.

Speaking of the economy at large, the Labor Department released the employment report this morning. There were 115,000 new jobs in April and unemployment dropped to 8.1% The latter is probably more due to people leaving the work force and the former was less than expected so overall the report is less encouraging than hoped for. On the positive side job creation for both February and March were revised upward, which is encouraging.

Here's an article summarizing all the findings (http://finance.yahoo.com/blogs/daniel-gross/april-jobs-report-more-same-135552516.html). The article also links to the full employment report.

[huggytree]

saw it on Fox News...86% still feel were in recession

i dont know any business owner (except for myself since ive been having a great year) who thinks the business conditions are good....everyone is negative in my world....Construction is hit hard and continues to be hit very hard....there are almost no small home builders left.....just a few big 'slap'em up' type builders left....i keep tabs on every builder/remodeler...my list went from 650 to 400 in 2 years...the majority of the losses were new home builders....

[billbenson]

Here's what Warren Buffett has to say:

Buffett: Obama beats Romney on economy - Video - Business News (http://money.cnn.com/video/news/2012/05/05/n-warren-buffett-annual-meeting.cnnmoney/?source=cnn_bin)

[Steve B]

I would guess it were true that 86% of Fox News viewers still feel we're in a recession. It doesn't look like their statistic matches other ways of measuring the economy.

[huggytree]

just saw it 10 mins ago on Fox news again and sorry...its 83%

its around 40% think were in recession/getting worse
and 40%ish in recession getting better

its a fox news poll....so i dont assume its Fox viewers only

i know the truth is were not in recession by the classic definition.

were actually a few of years into a Japan style 'Lost decade'....(my opinion)

[billbenson]

I thought it was interesting that Warren Buffett classified different industries. In the video he said the housing industry is probably in a depression but didn't classify other industries that way. Obviously that directly affects you Huggy.

[huggytree]

unskilled labor coming back may mean people are looking for cheaper ways to do things.....its what im seeing....lately ive had a flood of customers doing things wrong all in the name of saving the $....just did a kitchen and laundry last week...granite countertops...and they reused both sinks/faucets.....a beautiful new kitchen and a crappy, scratched up sink and a gunked up old faucet....same w/ the laundry...the laundry would have cost $125 more to redo with a new 'basic' sink/faucet...it just shocks me how stupid....

glad to hear Florida may be showing some sign of improvement.....ive been thinking of buying a summer home/retirement home for 2 years now...im only 41, so its hard to buy now and let it sit for 24 years.....but its hard to pass up on the prices too....if they stay low i may just do it in next year

[billbenson]

A guy from the Midwest bought a house across the street for about $70k. Gutted it and modernized the inside. Not an ideal location - small corner lot. Put up a privacy fence. He did a lot of the work, but he farmed out a lot as well. It's about 5 miles from the beaches.

Not a perfect place, but a lot better than a condo. He has a business that he can leave for a month or two at a time so I suspect he'll be back and forth when he wants a break. For his lifestyle it's a pretty good deal IMO.

[huggytree]

if i bought it would sit 99% of the time....id most likely look for a condo close to the ocean....pay someone to look in on it....we go to Florida for 7-10 days a year...if i owned a condo id find a way to go 2x a year

id only be buying it now for an investment/retirement house

[Blessed]

Around here the selling houses industry seems to be better - I would assume that all housing is also seeing an improvement. But at the same time I know a highly skilled cabinet maker who is out of work and went out of town to drive a fuel truck instead. It's not that the cabinet shops are slow - just that they don't need the high-end custom cabinet building skill level that the cabinet maker posses so they aren't willing to pay him what he is used to making.

[billbenson]

Setting aside unemployment for a minute, maybe salaries have just been reset to realistic levels for professionals. When I came out of college 35 years ago I was making $100k as a sales guy within 2 years. Today, with that experience level you would probably make 50 to 60. In 1999 when my career ended in the dot com crash, I thought I could come back to the US and could easily find a sales job making 100k plus. The best I could find was something paying 40k.

A friend of mine was a long time safety inspector for a city in CA. He was making over 100k and not working very hard. He's pissed because they are cutting salaries and taking away benefits.

Could it be that part of what we are seeing is pay scales normalizing from a prior inflated level?

I quit looking for a job when the jobs I was looking at were paying less than I was making in an online business I was developing at the same time.

[huggytree]

since im in the union i dont see any wage reduction...we've been getting $3 raises for years now...we are currently w/o a contract though and have been for close to 1 year now...there are a lot of non-union coming in from nearby cities to work on the new homes...the new home market is getting to be strictly nonunion

i just raised my hourly rate and trip charge and not one customer has flinched..every time i worry and every time i find it to be no big deal

every home builder around here has switched to the lowest priced sub they can find....i dont know if there is such a thing as a 'quality' built new home anymore...its sad, but people get what they pay for i guess....the market demands junk, so thats what they get.

the highest end guys are all gone and many of the low end guys too....the mid level guys(like me) seem to be doing well.

there isnt much demand for high end cabinets ill bet right now....people are remodeling again, but on the cheap....it bugs me to see beautiful bathrooms with cheap fixtures or used fixtures....its like people are throwing $ away....what they are doing wont hold up as well and they will just be remodeling again sooner

im starting to see people not look for value anymore....its all just looking for cheap junk

im still winning most of the jobs, so they are willing to pay for a quality install....just the fixtures they pick are junk

had a guy today buy his own water softner for me to install....he saved $100-200 over the softener i typically supply....his softener was 1/2 the size, so it will go off twice as often and it took an extra 1 hour or more to F with because it had some issues...i had to call Sears and 1/2 way through the call they transfered me to the wrong #.......basically he saved $50 in the end and got junk.......my final price was $250 more than he expected, so i had to explain how him buying the softener was $125+ of that.....i explained how mine was better, made locally (not Mexico like his) and never has any maintenance issues....i think this customer actually 'got it'....most dont