Building cars is hard, and Vietnamese electric carmaker VinFast has cleared the toughest hurdle: actually building the damn things. Unfortunately, the company seems to be struggling with the rest of it. What’s bad news for the company is potentially good news for consumers.
It’s kind of a weird mix of stories this morning, reflecting a larger trend in the automotive (and larger) world. One of my favorite visual metaphors is that of Wile E. Coyote running off a cliff. So long as he doesn’t look down he seems fine. The second he stops to consider gravity he’s suddenly overcome by it and plummets to the hot desert floor. The economy keeps posting big numbers (unemployment is down, GDP is up) and nothing seems to be slowing it down. Automakers, governments, suppliers, investors, and everyone else keep running as if gravity doesn’t exist.
The big question is: Can we make it to the other side? Maybe! People keep investing in battery plants like purchasing power will never diminish.
Not So VinFast…
The puns are too easy, unfortunately, with VinFast. The company says it will start delivering its first cars–the electric VinFast VF8 that Thomas drove recently–this week, and those customers will be treated to a fun surprise in the form of a big ol’ price drop.
When the VF8 leases were announced in January the price was set at $599 a month for 24 months. That’s not exactly competitive in a world where a Tesla Model 3 can be leased for a monthly amount of $525 for the same period (assuming 1.9% financing and $1,220 at signing).
Now, the website shows the VF8 city edition can be had for a far more competitive $399. Even better, according to this Reuters story on the price drop, people who already put a deposit down are getting an even better deal:
VinFast told people who had already paid a refundable deposit on the car that the payment would be $274 per month in California, the first U.S. state to receive the vehicles, according to messages to those potential buyers reviewed by Reuters.
That amounts to a discount of between 33% and 54% from the initially advertised monthly lease price.
“This is our special offer to VinFast customers for the VF 8 City Edition models in order to stay competitive with other brands,” VinFast said in a statement.
Nissans Will Fully Qualify For $7,500 Tax Credit By 2026
By offering a $7,500, point-of-sale discount on electric cars that are built in the United States with batteries assembled here, the Inflation Reduction Act essentially subsidized a huge EV battery boom. Do you want some proof?
Nissan announced that it will fully comply with U.S. battery sourcing and other rules by 2026, with six different EV models qualifying. Hans Greimel from Automotive News has the details in this piece:
The lineup will include a next-generation Leaf hatchback and the Ariya crossover, as well as four new models made for the Nissan and Infiniti brands at its Canton, Mississippi, plant.
The latter models, two sedans and two crossovers, will qualify for the full $7,500 EV incentive.
[…]
The U.S. localization plan will include making electric powertrains locally, including a possible revamp of the Decherd, Tennessee, engine plant to make EV units. Nissan currently imports completely built electric powertrains from Japan for the Leaf assemble in Smyrna, Tennessee.
That’s a lot of additional capacity being built here that was, previously, reserved mostly for Japan.
It’s all happening…
Michigan Town Might Lose Out On Chinese EV Battery Plant After Looking Into Chinese Ties
I should clarify: Everyone seems cool with American and Japanese electric battery plants. Chinese-owned plants? Eh…
Virginia’s governor already axed support for one plant, leading Michigan’s governor to poach that facility. An earlier plan from battery company Gotion Inc. to build a plant in Green Charter Township and/or neighboring Big Rapids Township have suddenly been upended. Why?
Here’s a Detroit News breakdown of the whole saga, but the key paragraph from the story is here:
A lawyer for Gotion Inc. contacted Big Rapids Township this week to notify the community that it would be focusing its initial efforts in neighboring Green Township instead, Big Rapids Township Supervisor Bill Stanek said.
The email from Gotion comes a little more than a week after the township board voted to have a federal review of potential national security risks associated with the Chinese-owned facility.
Hmm…
Just to clarify, Gotion is a Chinese-founded company, but its U.S. subsidiary is incorporated in California and Volkswagen owns about a quarter of it. While concerns over Chinese tech are not unfounded, in most of these cases we’re talking about taking advantage of Chinese R&D and battery development. The U.S. isn’t shipping our tech to them, we’re shipping their tech to us and (in theory) rapidly advancing our capabilities.
I’m kinda with Green Charter Township Supervisor Jim Chapman on this one:
Chapman last week called the neighboring township’s request for a federal review a “snipe hunt.”
“That question comes up,” Chapman said of the company’s links to China. “But it’s a publicly traded company, and I’m really not that concerned about it. The questions are there, but the panic is not.”
Ultimately, the two towns share a border and whatever side of that border the plant is built it’ll have a huge impact on the region at large.
Let’s Look At Some Cool Three-Wheel Bikes
German automotive supplier MAHLE and White Motorcycle Concepts out of the United Kingdom are teaming up to explore turning Yamaha TriCity three-wheeled motorcycles into electric bikes for police, emergency, and delivery services.
MAHLE is a pretty well known supplier, while White is best known for building the WMC250EV, an electric bike the company says will do 250 mph. Here’s the interesting bit from the press release:
The project will build upon WMC’s success with the WMC300FR hybrid three-wheeled motorcycle, developed in conjunction with Northamptonshire Police and on trial with emergency services across the country. Both it and the forthcoming fully electric version make use of the company’s patented V-Duct, a venturi duct that passes through the centre of the motorcycle that significantly reduces drag, improving performance and efficiency. The concept behind this central air duct has been honed on the WMC250EV that forms the basis for WMC’s electric land speed record programme.
The first stage of the program, funded by a government grant, will be to use MAHLE’s simulation experience to determine the best mix of chargers and battery chemistries for the type of loads these bikes will likely experience.
According to the Northamptonshire Police Chief Constable and UK Police lead for Motorcycles, the three-wheeled hybrids are “practical and very visible,” so that’s something.
The Big Question:
Is the economy Wile E. Coyote? Is it the Roadrunner? How do you feel about its current state?
Support our mission of championing car culture by becoming an Official Autopian Member.
I guess Chinese companies planting tracking and malware in their battery software like they have done on their computers and other products doesnt bother you?
Can’t say I’ll feel bad for anyone conned into buying/leasing a VinFast vehicle. The build quality on them is downright abysmal, and makes your standard 2010 Kia look like a Mercedes.
Matt,
2 misleading statements in the VinFast lease promotion:
1. referencing the Tesla lease using 1.9% APR.
2. The article states the $274 monthly payment is the result of a 33 to 54% discount.
Both statements are wrong. Leases contain 3 components, all of which can be subvented by the manufacturer; capitalized cost or the amount financed, residual value and money factor.
payment = (capitalized cost + residual x money factor) + (capitalized cost – residual divided by term)
So the lower payment could be offered by either deep discounts on the selling price, high residual, low money factors or a combination of all 3, likely a combination. Speculating that the low payment is the result of a deep discount alone is incorrect, you’d really have to see the lease terms.
> A $274 a month lease for a vehicle that goes 207 miles on a charge isn’t terrible, actually
To me the question is will the vehicle still work past the initial 207 miles? And where will I get service when it doesn’t?
To me the metaphor of Wile E. Coyote works differently. It applies more to the individual that just can’t get a break while some stupid bird fucks around getting lucky all the time. A big part of economic swings are driven or exaggerated by exploitation/corruption/inequality. Are we on the precipice of disaster or are we overreacting? It doesn’t really matter since we still have this fundamental problem.
If things go to hell and I lose 50% of my income, I’m probably going to be alright. How many people will have their lives upended by losing 1%?
As usual, the economy is probably neither. It’s something in between. Like the Roadrunner, but with a high ankle sprain. The thing is, it’s hard to tell how real or severe that high ankle sprain is, sort of like when you watch a guy who claims to have one outrun everyone for 30 yards down a football field.
(Eagles fan – still bitter)
I tend to be just as bad as anyone else predicting that the economy is going to collapse because of A/B/C. Probably because I’m still licking wounds from graduating college in 2010. But the reality is, as for much of our country’s history, some things suck, and some things don’t.
“…you watch a guy who claims to have one outrun everyone for 30 yards down a football field.”
Cortisone is an amazing drug! Until it wears off. Of course, a Super Bowl ring helps ease the pain as it wears off.
I’m just going to continue driving my 95 xj and pretend it’s still the 90s until ICE vehicles are banned.
Places in the US are foolish to trust partnering with Chinese companies on EV resources.
The ugly future for battery resources is why I am against giant batteries in EVs. Sure this won’t happen in the US, but what Chinese companies are doing in Africa, South America, etc is evil. US companies would do slightly better but their hunger for greed & power are no different.
https://www.insider.com/photos-terrible-conditions-cobalt-mining-industry-to-meet-battery-demands-2023-2
Yeah, Big Oil is way more ethical!
“VinFast told people who had already paid a refundable deposit on the car that the payment would be $274 per month in California, the first U.S. state to receive the vehicles, according to messages to those potential buyers reviewed by Reuters.”
So, from $599/month and you never own anything, to $274/month overnight. But there totally, definitely isn’t anything at all fishy about any of the numbers. Sure. And Kenneth Lay was an upstanding businessman.
“Chapman last week called the neighboring township’s request for a federal review a “snipe hunt.””
‘Snipe hunt’ is the incorrect terminology.
The correct terminology is ‘racist bullshit because Nazi ideology is mainstream now.’
“Is the economy Wile E. Coyote? Is it the Roadrunner? How do you feel about its current state?”
I’m gonna share a picture with you all. Save this picture and the next time your employer starts talking about layoffs, pay cuts, benefits reductions, pay being ‘based on your location,’ or ‘needing to share the pain’ you just slap them with this. Repeatedly. This is in extreme rural Texas.
https://weirdautos.files.fedi.monster/media_attachments/files/109/931/445/864/646/099/original/14d9341f6c9f0c03.png
“So, from $599/month and you never own anything, to $274/month overnight. But there totally, definitely isn’t anything at all fishy about any of the numbers. Sure. And Kenneth Lay was an upstanding businessman.”
I think that’s a touch unfair. Realistically, VinFast isn’t likely to make money on any of their cars in the United States for a while. The difference between $599 and $274 on your first 999 cars is almost meaningless. What VinFast needs to do is start getting cars on the road for people to see. Lowering the price to a competitive (but not free) level seems the easiest way to do that.
Not only do they need cars on the road, they need to avoid unfavorable comparisons. People spending $600/month are going to hold the vehicle to a different standard than people spending less than $300. You go from near-luxury pricing to bargain-bin pricing and the expectations do the same.
I worked for a company that was selling product at a loss and hoping to make up for it in volume. I didn’t recieve a final paycheck.
Yup. Imagine working for a Tier 1 OEM/SI and your primary competition is one Michael Dell.
You build a better computer, but he builds more of them.
You offer your system with a reasonable 5% margin. Mikey there says “fuck you” and sells his system with a 1% margin. So you have no choice but to lower your margin to 1% so you can match on price.
Except now you have to ship 500 times as many systems to ensure people get their paychecks. Even though you aren’t selling at a loss. You can’t sell that many systems because you don’t have the money to hire the staff or to build that big a factory.
So someone decides to compete on price harder, by undercutting Mikey and offering marked up addons. Well. Those marked up addons didn’t take. Not the partnerships. Not the extended warranties. Instead you’re just selling $1199 computers that cost you $1224 to make.
And because it’s $1199, every PC review magazine is raving about it. The pricing miracle. You gotta buy one for home and one for work. (We’re losing $25 on every one of them.) Suddenly it’s the only system you can sell. They chose to discontinue quickly, but the damage was done.
I see a lot of auto parts and electronics that used to come from China now sourced from Vietnam, Indonesia, and India. So it makes sense that over time those countries will move up in the vehicle production hierarchy.
Just like the USA —>> Mexico —>>China progression that has taken place over the last three decades.
A touch unfair maybe, but by the same token, it’s basic math. Sure, losing a bit of money on the first 1,000 out of say, 50,000 units is no big deal. But they’re also cutting the next 49,000 to $399.
So either they were making $200/mo profit on these (unlikely,) or the money has to be coming from somewhere. You can’t just say “oh, well, 1) sell everything at a loss, 2) ???, 3) profit!”
Remember, computer guy. Who oversaw direct competition with Dell, natch. So I’m depressingly familiar with the ‘undercut even if we sell at a loss’ strategy. Dell survived until they bankrupted or chased everyone else out of the consumer PC space by selling at a loss or razor thin margins (sub-1% was their norm,) and then immediately faceplanted when they had to keep selling at those numbers. They didn’t find savings or a way to make consumer profitable; they panic-diversified into other areas because they made margin impossible on consumer.
Since VinFast has about as much chance of bankrupting GM, Ford, or FCAtlantis as I do, you can rule out ‘killing the competition.’ They might scare off some of the other newcomers, but that’s about it. And once they make THAT big a swing, trying to go back to $599/month is basically impossible.
Again, I refer you to Dell. Their profits are entirely rooted in high margin data center and services, and they have been completely unable to raise prices on the consumer units. At all. For decades. And component costs have not gone down, nor have they found unrealized savings.
The retail price of Dell’s lowest priced Inspiron laptop in 2017 was $450. The retail price of Dell’s lowest priced Inspiron laptop in 2023 is $450. The retail price of Dell’s lowest priced Inspiron laptop in 2013 was a whole $500.
So let’s apply the same theory including automakers. Propping up one money hemorrhaging division (consumer or Lancia) with a money printer (services or Jeep) isn’t unheard of or unusual. But it requires two things. One, you need a money printer. Two, you still have to control the bleeding.
Vingroup has shown the opposite on both counts and their financials are honestly pretty terrifying. They filed for an IPO for VinFast in the US in December. As part of that, they have to disclose certain financial information. Expenses versus revenue are over 32% (that’s an absolutely terrible ratio,) revenue is declining steeply, losses are growing, gross margin is over -82%, and they had $77.6M cash on hand versus $8.8B in liabilities with a burn rate of over $2B/year. And they’re already making and selling cars elsewhere.
That means Vingroup (the parent) has to have a lot of cash on hand to support that kind of burn rate. But, they don’t. If I did my math right, as of March 2022, Vingroup had just 18,352,236M$VND on hand or about $770,793,912 USD.
Not only that, but $399 a month is still way too high for a $41k MSRP, much less from an unknown brand. Especially when lease deals appear to be back on the menu for some manufacturers.
> VinFast has about as much chance of bankrupting GM, Ford, or FCAtlantis as I do
GM doesn’t need you to go bankrupt!
You, sir, should have gotten COTD.
GM has indeed proven they don’t even need themselves to go bankrupt.
I recently used those exact Buc-ee’s rates to help out someone. Comparing corporate jobs to a gas station (even if it’s not an ordinary gas station) helps put things in perspective.
Mmhmm.
I don’t care who or where it is. Developer should not be making less than the car wash manager, period. Sure, car wash manager is a job that requires a wildly different set of skills.
But all you’re really saying there is that you think someone writing complex code, debugs it, and delivers a significant portion of your revenue is worth less than someone who orders chemicals, troubleshoots machinery, arranges repairs, and delivers a significant portion of revenue.
And right on for Buc-Ee’s treating their employees fairly.
“The requirements for this position include, but are not limited to: ”
You have no idea what the unspoken requirements for those highfalutin jobs are.
Sure they might SAY only a BS + 10 years of relevant experience when they REALLY mean an Ivy League MBA plus 10 years C level experience at a Fortune 500, etc. Also having to lift 40 lbs.
And that’s not even getting into the EOE part. Its quite common to see departments stick to a particular ethnic or cultural group even in diverse areas such as Silicon Valley.
Minor correction. Green Township is up North in Alpena country and not near Big Rapids. I think the article should say Green Charter Township instead, but anyone that really cares about the difference probably already knows 🙂
Thank you, fixed!
“Everyone has a Tesla. How many people have a VinFast?”
Everyone has an iPod, how many have a Zune?
Devils advocate here: “Everyone has a Camry, how many have a Ferrari?”
… I have 4.
And a Saab.
Nevermind.
What does a police scooter need a “a venturi duct that passes through the centre of the motorcycle that significantly reduces drag” for? Aside from the suspect physics (I haven’t seen any V-Ducts in MotoGP or even on sportbikes), these things tootle around at 30mph or less most of the time. Oh, I see – there’s a government grant involved.
Well, electric vehicles do benefit from improved aerodynamics. I agree that that does sound like marketing nonsense, though.
You haven’t seen any 3-wheeled MotoGP bikes either.
But but put a wind device in the duct and create electricity to power the scooter.
Leasing EVs is the move right now. I’m pretty anti-lease in general but when it comes to early adapter products that are going to be obsolete in 2-3 years it makes very little sense to tie up any money into the vehicles long term. It’s best to enjoy them as a here and now product then upgrade as soon as the technology improves.
Unfortunately I do think there’s going to be an environmental impact of commoditizing these products. No one is going to want an EV that’s down to 150 real world miles of range in a few years. Before you know it there will be Teslas and Mach Es on buy here, pay here lots and in scrap yards. I just hope we’ve found a decent way to deal with the batteries by then…be it refurbishing them, recycling them in some way, or having a safe way to dispose of them.
I have a 2015 LEAF I bought used in 2018 that’s down to probably 40 ‘real’ miles, and still love the shiz out of it.
It is the *perfect* car around town, I can get anywhere I need and back in comfort if I’m above 66% battery*. Zippy with an admirable turning radius it can get anywhere with ease around town.
Because it’s being used for the vast majority of our driving, it’s definitely keeping our ’04 V70 alive longer than it would otherwise. I just need that porker to hold out another 5 years until baby is out of preschool.
*There are three charging dots indicating which third of the battery is charging, once the final third light is blinking I typically unplug to not keep it charged at 100% / prolong life.
It’s a bit like all of the expensive water bottles people replace every four months so as not to waste plastic bottles. I somehow have three water bottles (metal) myself, and I haven’t bought them, they just materialized. People are greenwashing their own lives just as well as the corporations do.
Reduce remains the most important R in Reduce, Reuse, Recycle.
“battery company Gotion Inc.”
I like that the name can either rhyme with ‘motion’ or can be split into ‘got ion’.
“MAHLE is a pretty well known supplier”
If it’s the same company, they made (make?) very nice piston and barrel kits for air-cooled Volkswagens.
“practical and very visible,”
I imagine they would be, decked out as they are in the standard Health & Safety livery. These probably won’t be used for high-speed chases, but I wonder what the max lean angle is [that will keep both tires on the road] with the dual-wheel front end.
> These probably won’t be used for high-speed chases,
Would watch
I immediately wondered that myself.
May well nerd out this evening & try to find out exactly how the wizardry is done
Aside from everything getting more expensive these days, things in general are collapsing slowly. We just got a “storm” in Michigan on Wednesday and there is still people with no power, a basic necessity. The train accident in Ohio, polluting water and affecting thousands of people and we don’t know the extend of the damage so far. Covid was not the fault for any of these things. The auto industry its heading to electrification when we don’t have a good foundation for it. I don’t even enjoy driving my electric car, the neighbors know me as the guy with the electric car, what is even that? lol
I guess reading what I just wrote, I realize the problem is not the economy, its the society in general lol the money is there its just things are not going well for everyone
“The future is here, it’s just not evenly distributed” (or something very like that)
Don’t forget that the power has always gone off during a storm. And taken time to get back on. It’s no better or worse than it has been for years.
There was a time when utilities were heavily regulated in the public interest.
Now that we universally understand that Regulation Is Bad, utilities are free to maximise (short term) shareholder value by cheapening out on infrastructure maintenance.
I can remember when power outages were so rare that they were kind of exciting, but always over in an hour or two. I can also remember once in the mid Eighties when a wintertime outage in western New York made national news because it lasted four or five days.
It is Wyle E Coyote. Propped up by faux numbers even more now than it used to. Low unemployment numbers are distorted by the fact so many people were out of work snd exhausted their benefits. So now tens of millions still not working but not being counted. New jobs reports highlighting recent new jobs all but ignore the high paying tech sector where jobs are now rarer than a 3 piece suit in the CEO office. And all that BS under Trump pushing Independent Contractor or gig jobs means those people owned their own company and are not eligible for unemployment so they don’t count.
Labor force participation is at or above pre-pandemic levels for all cohorts under age 65.
Prime age (25-54) is well above the level of most of the 2010s.
https://fred.stlouisfed.org/series/LNS11300060
Let’s not fail to mention how many of those jobs are filled by people who are working 3 jobs that don’t offer full-time hours so that they can pay rents that have increased much faster than wages or inflation. The reported unemployment number(s) are really only a shorthand that leaves out lots and lots of context. Much like the economic growth numbers, and people mistaking the stock market for the economy.
The economy is currently Wile E. Coyote holding up a sign that says ‘Help!’ after the cliff already collapsed, in that brief moment of cartoon inertia. The only thing left to wait for is the crater.
*Puts on suit of armor*
The economy is much better than most pundits, media, etc. give it credit for.
1. Unemployment remains at record lows.
2. Wage gains have been broad, but also highest at the bottom end of the spectrum for years now, which has notably reduced inequality.
3. Inflation is high when comparing YoY, but MoM is pretty low, despite prominent things (eggs) grabbing an outsized share of attention.
4. The stock market is down, but only to 2020 levels. We haven’t wiped out a decade of gains, like we did in 2008-09.
5. Consumer demand is high, meaning people still feel confident enough in their personal situations to go out and buy things.
6. There is no sign of an impending supply shock in commodities or a housing bubble, which are the things that can really wreck an economy.
7. Divided leadership in Washington decreases the chances of anything reckless happening to disrupt the economy.
Now, is everything perfect? Of course not. And you can always point to someone who is getting hurt. But a lot of this is people not being used to an environment of rising interest rates, since we haven’t had one in quite a while. I think if most commenters here were honest with themselves, their financial position is better than it was in 2019, all things considered.
Not my position.
This! It’s more of the US economy normalizing, than receding. The world economy is shaky, but the impact on the US economy isn’t what people think.
I’ve seen too much that shows a recession is coming. However, the caveat every time I read/watch about it, no one wants to even attempt to say how bad it will be; so they are getting the clicks acting like the sky is falling, but it may just be cloudy, with a chance of meatballs.
In my area – Central Ohio – it looks like we’re going to be shielded from it because we have a number of large universities, are the seat of government, and Intel is investing more money in Licking County than Licking is even worth! I don’t see things being horrible in this metro area.
However, it’s going to be interesting to see how the rest of the country will fare. Will the IRA bring investment to enough of the country that it will negate or even cancel the predicted recession?
It’s still going to be a wild few years, I think.
> Intel is investing more money in Licking County than Licking is even worth
You underestimate the value of Licking.
Living in a burg formerly known as Big Lick*, I heartily concur.
My financial position would be better if not for the inflation factor. That pretty much wiped out my gains and then some. I suddenly find myself struggling to get everything paid month to month despite making more money than I was then. It’s a weird situation. That said, I’m still confident I can catch up within a year and make it work by adjusting spending habits.
This time last year, when inflation was +9%, I got a 6% raise, or a 3% pay cut. That’s 3% COL, which is so insulting it’s actually funny, and I told my boss and her boss exactly that. Tack an additional 3% on that for a promotion I got at the same time raises took effect. Yeah, I took a 3% pay cut WITH A PROMOTION.
Fortunately I discovered I was overpaying for car insurance. Switching providers cut that bill by half. Couple that with my GTI finally getting paid off later this year, and I’ll be sort of okay, at least in the short term.
Inflation blows, but I can cut back. Anyone else thinking about cancelling Netflix too?
I feel similar. I was out of work for two years (April 20-March 22). I’ve been almost a year at this new job. Pay is a nice increase to what I made before (without me having to drive all over the state). In January, I got a 5% pay raise. So I’m making good money but inflation has eaten into that. Luckily, I bought my home in 2013. On paper, I should be doing better but the reality is I’m just maintaining my course.
Housing is a rough one, as a combination of short-term rentals and slowed building means that we could easily see a bubble and then see it burst in rapid succession. AirBnB has been seeing criticism lately, and prices coming down on building supplies could end up in a sudden flooding of the market if people want to offload short-term rentals and building increases.
That said, it would still be a much better bubble burst than the lending bubble the last time. It could mean more affordable homes for a lot of people, rather than the lost homes of the last one. Which would arguably be good for most other sectors, as affordable homes mean spending in other areas.
The recent tech layoffs have me nervous. That’s a lot of disruption in a major sector. I suspect that it is an effort to reduce wages. Fire a bunch of people, then slowly hire people at lower wages. While that is a higher-income segment of the workforce, I suspect that we’ll see wages come down in other areas, as well.
Other than that, I largely agree with you. That said, I live in a state that is making all sorts of reckless choices, so I’m a lot more concerned locally.
The thing about the tech layoffs is all those companies still employ more people than they did even a couple years ago. Again, a high visibility sector and a media desperate for bad news has kind of blown that up into a Big Thing. I can’t rule out the scenario you describe, but I don’t necessarily think it’s nefarious, and I don’t think it’s something that will spread widely either.
Housing I think has a pretty decent floor under it, because of how underbuilt we are, and all the pent up demand. You just aren’t going to see a sustained period of low prices unless and until we build enough homes for all the renters who want to buy.
Maybe it’s specific areas, but looking at the maps of AirBnBs and other short-term rentals in residential areas has me, a renter, somewhat hopeful that people shift back to hotels and that puts me in a better position to buy. But, yeah, the chronic underbuilding has certainly been a problem for some time.
As to tech sector stuff, as someone affected (but still employed) it certainly feels rougher than it probably does from just data. And I can’t help but connect articles talking about labor shortages, increased wages, and how it affects the “economy” to these moves. And I’ve seen it before. They get rid of a bunch of employees, mostly the senior ones who cost the most (voluntary retirement is a great one for this), then are back at previous levels a few years later, mostly with young new employees who cost less.
I don’t mean any of this as massive doom and gloom about the economy. And it will probably help the stock market and all that. But it’s something to keep in mind as we likely see companies trying to fight the shift of power to the employee that has been occurring.
A large portion of the tech layoffs are H1 visas, its get a new job within 2-3 (can’t remember how long law requires) months or leave the country. The impact of that can be good & bad.
> prices coming down on building supplies
I was shocked to see <$5 2x4s and $12 4×8 Sheetrock this month for some work I'm doing.
My financial position is significantly better and my wife’s is as well. It’s hard to compare directly since we were just dating in 2019 and still financially independent….but my salary has gone up by $35,000 since then and hers has gone up by similar if not more. Granted, we’re both in the healthcare field and have graduate degrees/are licensed under the department of health, so we are in a position of privilege compared to probably 80% of the country or more.
But still…we’ve pretty much done better every year since then. Some of that is due to being essential workers during this entire mess, but a lot of it is also due to wage growth and the shift in power towards labor in recent years. Granted, conditions for American workers still need to improve, but we’ve each been able to essentially sit back and let potential employers bid on our services/request 5-10% raises every year and get them no questions asked. People are also leaving our field in droves (I’m at upper management level in the mental health and she’s an NP) which makes our services more in demand.
Our retirement accounts are another matter entirely…but they’re starting to stabilize and I think they’ll go back to appreciating soon enough. We’ve also done ourselves a lot of favors by being frugal and fiscally conservative. We’ve taken a very old school approach to our money and as of now it’s definitely working. I’m sure if we wanted to try some ambitious stuff we might be able to come out even further ahead but neither of us think it’s worth the risk in our early 30s.
We’re just going to keep paying the mortgage, putting money into our retirement accounts, saving money traditionally, and not incinerating disposable income on shit we don’t need. We’re fortunate as hell to be in this position…and hopefully we’ll be well set up for the immediate and distant future.
“People are also leaving our field in droves (I’m at upper management level in mental health”
Boy you said it, this is exactly what my wife does and staffing has been a huge source of frustration for her.
Your salary went up by more then I’ve made annually for the first 45 years of my life. I just got out of being a humble bicycle mechanic and school Ed Tech and into a corporate job. I finally earn a living wage at age 46. There are no retirement plans for me. I will work and live frugally for the rest of my life, just like I always have. Glad you are in a good position in your 30’s. You are better off then many. I got frustrated fixing bikes that cost $5000+ when I could never afford one. Heck, my project vehicles have all been less then that in price. As for mental health work, I have never bothered to use my BA in Psychology. No thanks. Glad you are putting your degree to use.
$35k today was $11k 40 years ago and $21k 20 years ago. Saying you never earned $35k a year in the past 40 years isn’t saying much until maybe the past 10.
But…but…but…if the proles think the economy is good, they might not work unsafe jobs at crazy hours for shit pay! You’re taking money out of rich guy’s pockets! You’re encouraging the regular people to show their oats and stand up for their rights!
Don’t you understand that your wealthy overlords want us desperate and scared? You’re ruining everything.
Too true. Not a scrap of hyperbole there. Our corporate overlords want US workers to be in the same position as Chinese workers. America was great when businesses provided a living wage and a set benefits plan, not when corporations ran the government.
You mean like when you had a job and if you stayed long enough, you could earn a pension?
I read recently that rising interest rates shouldn’t be freaking people out. They’re returning to normal. 0% for years, that’s NOT normal or sustainable, but people just got used to it.
Correct, but I am almost 40 years old and rates have been near zero for almost my entire working life. It’s not surprising that lots of people took that to be a permanent state.
Sure since 2002 rates have been very low near 0 except 2005-09, but dot com bust, 9/11, housing crisis, covid, too many extraordinary events that they screw up with govt bailouts which ruin the economy and they try to fix with rates. More ultra low years since 2002 than almost all combined in prior 100 years. Your parents possible never had even a few years of rates like that their whole life until 2002.
Low rates are bad, most people only see one side since they have no savings and only care about loans, those of us with savings hate the low rates.
Just cause your grandpa remembers the days when he could get a hersheys and a coke for a nickel doesn’t mean it should always be that.
The financial markets post-2008 have been crazy. Historically low interest rates and barely any negative returns in the stock market (the big dip in 2020 almost doesn’t count because it bounced back so fast and so high). As someone who was early in my career in 2008 I worry that even having lived through that I’ve gotten complacent because it’s so easy to assume that markets will just always go up.
exactly! free money for too long. And rising rates will be a boon for the bond market. that’s good for people my age, where more security and less volatility in investments becomes paramount.
A lot of the discussion around the economy has been strange largely because it’s easier to get engagement by distorting numbers, and negative numbers tend to generate traffic. So you’ll get alarmist articles while trade numbers – for a metric I’m fairly familiar with – have been on an upward trend across the board.
It’s very hard to get a read on economic indicators just because nobody actually seems to care what they are, they’re running in subjective things.
On point 2 you are absolutely and completely incorrect.
Inequality has reached levels well above that of the Gilded Age of the robber barons; the top 1% now claim 27.4% of all income period. Households making between $153k and $233k (the top 10-5%) have seen a net decline of over 1%.
https://eml.berkeley.edu/~saez/saez-UStopincomes-2021.pdf
Inequality in the US peaked in 2012 and has slowly fallen since then.
https://qz.com/us-income-inequality-hasnt-risen-for-a-decade-1849615199
https://www.pnas.org/doi/10.1073/pnas.2204305119
As to the better financially, I am, largely because I took a new job when my previous one was not moving in the right direction. I am worse off financially this year than last, due to tech sector slowdowns and the decisions they made. But I’m still employed, which is not true of everyone in this sector or my company, so I’m going to ride it out for now.
As for my financial situation, it’s worse than 2019 but it would be better if not for some other stuff that happened in 2020-22
#7 is a relief. It’s never good when one side has all the power.
Inflation was up, but at the same time as corporate profits are up indicates it is a false inflation, and just a profit grab after a few lean years. Inflation may have been it’s highest in 50 years, but corporate profit was its highest in 70 years.
The difference between a recession and a depression.
In a recession, your neighbour loses his job.
In a Depression, you lose your job.
I have a feeling that the same thing is going on here. If you are in danger of losing your job, a recession is coming. If you don’t think that will happen, then we just have some inflation and you need to trim a little bit.
MoM inflation doesn’t matter to the average person, as the new normal due to YoY has permanently jacked up expenses. Most food items I purchase have increased 50-100% YoY, and because we hate deflation (infinite money forever!) it’s never going to go back down. That sort of permanent cost increase essentially wipes out the wage gains in the lower class, and is pushing the existing (if now nearly extinct) middle class further down the ladder.
Housing prices (both for purchase and rent) have also skyrocketed. These aren’t likely to go down. It’s a serious problem.
I think you are probably correct on every point, but I need to wait to see what Elon has to say about this.
>…(eggs) grabbing an outsized share of attention.
If it leads to more hot-breakfast-to-go options without eggs in them, it’ll be worth it.
Is the economy doing ok? According to all my friends and cousins on facebook the economy is the worst it’s ever been and the country is going to fold up any minute now all because that damn Joe Biden didn’t order enough Oreo’s for the country to stock store shelves and the gas prices and Hunter’s laptop of course.
Sounds like you need some new friends and cousins!