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Dog-faced pony soldier
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Recovery? I Don't Think So (Check July ABI Numbers)
This is the "Architectural Billings Index", generally held to be a good barometer of the construction industry and by extension, an indication of trends in the economy-at-large. For those unfamiliar with this system, a score of 50 represents a "flat" month-over-month billing rate, which implies steady growth in the construction industry as old projects are completed and billed out and new projects come in.
In January of this year, the ABI was the lowest ever recorded. The months that followed have shown relatively flat numbers (scores typically around 47-49), meaning the industry was "hanging on" with slight declines overall. This was some cause for optimism that maybe things were stabilizing and the brunt of canceled pending projects and the widespread layoffs and practice closures (contracting, A&E, etc.) had perhaps finally reached a point of sustainability industry-wide. People for some time have been looking for an uptick in billings (a score >50) as the effect of "stimulus" projects kicked in, although a score greater than 50 (showing a month-over-month overall increase in billings) has not happened in a year and a half now... Despite all the claims that "the stimulus is working" and "the early stages of a turnaround are starting", the July ABI number came in at 37.7, which is quite bad. Here's the whole article from the latest AIA newsletter, for those interested... - - - - - http://info.aia.org/aiarchitect/thisweek09/0724/0724b_otb.cfm - - - - - Architecture Firm Billings Decline Sharply in June by Jennifer Riskus AIA Economics Research Manager Summary: After three months of holding steady, the ongoing slowdown in business conditions at architecture firms accelerated again in June. The Architecture Billings Index (ABI) score fell to 37.7, its lowest point since February, indicating that the downturn may be more deeply entrenched than anticipated. ![]() It has now been 18 months since the ABI has reported a score above 50. (ABI scores above 50 indicate growth; a score below 50 indicates decline.) On the other hand, the index of inquiries into new projects had a score of 53.8 this month, marking the fourth consecutive month that growth has been reported. While this is an encouraging sign, business will continue to be tough until these inquiries turn into actual billable work. Business conditions remained weak in all regions of the country in June, with firms in the Midwest and West continuing to report the steepest declines. However, businesses located in the West have seen a slightly slower pace of decline for the last three months. ![]() For the third month in a row, billings showed their largest drops at firms with an institutional specialization. Business conditions at residential firms have moderated since the all-time low score recorded last December, but continue to indicate a decline in billings. Despite some signs of life during the last few months, the overall economy remains weak as well. Employment continues to decline each month, with payrolls declining by 467,000 jobs in June. The construction industry remains particularly soft and shed 79,000 jobs this month. In addition, the unemployment rate remains high at 9.5 percent, although it was relatively unchanged from May. The latest issue of the Federal Reserve’s Beige Book, released in mid-June, continues to show widespread weakness in commercial real estate, accompanied by rising vacancy rates. Major new construction projects have been cancelled in the Atlanta, Chicago, and St. Louis regions, while the number of new projects has declined significantly in the New York, Philadelphia, and Minneapolis regions. But in some more positive news, the Consumer Sentiment Index continued its rebound in June, reaching a score of 70.8, after the most recent cyclical low of 55.3 last November. The economy may be recovering more slowly than they would like, but consumers are starting to feel slightly better. ![]() This month’s special question asked our panelists to provide an update on their firm’s business-related concerns for the remainder of 2009. The two issues that were identified as the biggest concerns—finding new projects/markets/clients and coping with a weak economy—are the same two issues that were mentioned most frequently in December 2008 as the biggest concerns for the coming year. However, now nearly half of the survey respondents (47 percent) indicated that identifying new projects/markets/clients was their biggest concern, compared to 36 percent six months ago. On the other hand, the share of firms most concerned about coping with a weak economy fell from 34 percent in December to 22 percent in June. When asked to compare anticipated firm billings for the second half of 2009 to the first six months of the year, the response was overwhelmingly negative, with nearly half of firms (46 percent) indicating that they expect billings to decline. Fewer than one third of firms (30 percent) believe that billings will increase in the second half of the year, and 25 percent anticipate that they will remain at the same level where they are currently. Firms located in the Midwest and the West were most negative, with 53 percent and 49 percent respectively indicating that they expect billings to decline further. Firms with an international focus, which are typically larger, were most optimistic; 43 percent indicated that they expect billings to rise in the next six months, in comparison to the first six months of the year. ![]()
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A car, a 911, a motorbike and a few surfboards Black Cars Matter |
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Did you get the memo?
Join Date: Mar 2003
Location: Wichita, KS
Posts: 32,512
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Here's what we were told earlier this week at work: "The storm is coming, we're building an ark. There's not going to be enough room on the ark for everyone."
Lovely, and I thought we'd at least bottomed out. Expecting another 1500-2000 layoffs in August and September.
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‘07 Mazda RX8-8 Past: 911T, 911SC, Carrera, 951s, 955, 996s, 987s, 986s, 997s, BMW 5x, C36, C63, XJR, S8, Maserati Coupe, GT500, etc |
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Registered
Join Date: Aug 2000
Location: Palm Beach, Florida, USA
Posts: 7,713
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Oh I couldn't agree with you more. People are confusing being able to see the bottom with being at the bottom, and getting worse at a slower rate with getting better. We'll probably have a second wave market crash and deeper recession when people figure out that this wasn't the begining of the end, but just the end of the begining.
Sales just have not come back across the entire economy. It doesn't matter what industry you're in. Profits can be propped up for a while, but revenue is nowhere near what it needs to be to support the current stock market levels, and the economic drag of unemployed professionals is causing more economic drag, which causes more layoffs. We dodged a bullet last fall and again in February and March when it looked a lot like October, 1929, so by that measure we're a lot better off. But sales and profits and employment are worse this quarter than last, were worse that quarter than the one before, and so on. Next quarter will be worse yet than this on. The question is whether at that point we do hit bottom and growth starts to take hold.
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MRM 1994 Carrera |
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Dog-faced pony soldier
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It's all about the jobs.
Until people sever the rectal-cranial connection and hiding behind "well employment is always a lagging indicator of recovery", there won't be one. Period. It's that simple. Businesses and/or governments need to be creating jobs. REAL jobs, not phony, temporary or part-time "stimulus" ones. Until this starts to happen and people really start believing that they might actually get back to earning again, there will not be a recovery. And where exactly are those jobs going to be created? Energy sector? Doubt it - saturated already. Manufacturing? Riiiiiight - if you're in China maybe. Construction? Don't make me laugh, not with every 5th building vacant right now. Healthcare? Maybe, but there's concern that government meddling and/or potential nationalization might kill that one too. There are also very steep barriers to entry. Entertainment? Nope, not until jobs/incomes come back - that one's a lagger. Retail? Same story, typically. Some varying degrees of elasticity to account for staple/durable goods. Where's the growth going to happen? What's going to be the "next big thing"? This is what all the investors are sitting on the sidelines waiting to see right now and there won't be any meaningful job creation (and by extension, no real recovery) until people start to believe they know what it is and start seeing potential somewhere. Hypothetically, let's assume it's alternative energy. This is one a lot of people (including Obama) point to as having promise. The reality is that it's going to take a while to convince people (especially with global petrol prices crashing) that this is the correct way to go. Investors are skeptical. Why sink billions into a risky endeavor when you have a "sure thing" with oil and natural gas right now? Not to mention pretty stable profit margins. It's a tough sell. Even if it were to catch on, it takes a long time to train/retrain people to work in a new technology area like that and for the "legit" players to establish themselves versus the fly-by-nighters. It'd take a while for any kind of real job growth there. And even then, would it really be enough to offset the millions of losses we've seen? Maybe, but I have my doubts... I think we're in for a very long, painful period of high unemployment, recession, destroyed personal wealth, shattered dreams and net decline. For the foreseeable future. I just simply do not see any area where real innovation can happen to spark the kind of job growth necessary for a meaningful recovery. Across-the-board virtually every sector appears saturated, played-out, uncertain or otherwise not convincing enough to investors and companies to stake money on it. And that means "no job creation". We went through this same scenario (for those with short memories) recently in 2002-2003. Remember everyone railing against GWB and his "greatest job destruction since the Great Depression"? A lot of these same issues were discussed then. The ONLY thing that "pulled us out" of the recession then was the artificially "stimulated" growth in the housing sector. That's it. And that simply shifted the problem to today - now we're paying for it with interest. A lot of interest. We can't "stimulate" our way out of this one artificially. This is not your father's recession. This one is a referendum on our entire economic model and thus far, its appears to be coming up "no confidence". We need real, new, fresh ideas - not just more government-mandated artificial prop-ups like "cap-and-tax", or "green building" laws/codes/requirements or a bloated government-run healthcare system that nobody can understand. Eventually "good old Yankee ingenuity" will rear up, there will be a growth area somewhere and people will pig-pile onto it. Business will spring up and investment money will flow. Jobs will be created. THEN (and only then) will we see recovery. But I don't know where that will be, or when. For now it seems like innovation is pretty dead in the U.S. and until it comes back, there ain't gonna' be no recovery.
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A car, a 911, a motorbike and a few surfboards Black Cars Matter Last edited by Porsche-O-Phile; 07-24-2009 at 11:50 AM.. |
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Banned
Join Date: Sep 2006
Location: South of Heaven
Posts: 21,159
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Banned
Join Date: Sep 2006
Location: South of Heaven
Posts: 21,159
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Quote:
Empty lots, smashed dreams, gone. He himself is barely keeping his head above water, he just sold a $400,000 property (it was a $750,000 property 2 years ago) to buy himself another 6 months. Last month he sold 5 cars. His usual average? 30. |
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Dog-faced pony soldier
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He should get out of selling cars and into fixing them, if there's any way he can do that.
I imagine more people will be looking to fix up old cars than run out and buy (or lease) new ones every two years to try and impress their friends. As much as I hate the thought, I'm seriously considering trying to get some ASE credentials so I can go work some shifts in a garage somewhere, especially if flight instructing and architectural work don't cover all the bills.
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A car, a 911, a motorbike and a few surfboards Black Cars Matter |
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Did you get the memo?
Join Date: Mar 2003
Location: Wichita, KS
Posts: 32,512
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To that end, I'd like to thank our president for demonizing the aerospace industry, one of the few US industries that contributes to a positive trade balance. One of the few industries in which we're still a world leader. In a poor economy, it's wonderful to have your product portrayed by the president as a toy for the wealthy, a sign of riches and excess. It's great to have customers cancel orders thanks to public backlash and bad PR. Thanks for the help sir!
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‘07 Mazda RX8-8 Past: 911T, 911SC, Carrera, 951s, 955, 996s, 987s, 986s, 997s, BMW 5x, C36, C63, XJR, S8, Maserati Coupe, GT500, etc |
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Did you get the memo?
Join Date: Mar 2003
Location: Wichita, KS
Posts: 32,512
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Nearly every diesel shop in town is hiring here, no credentials or professional experience required. It's pretty easy to start at $12-14/hr, not bad money for KS.
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‘07 Mazda RX8-8 Past: 911T, 911SC, Carrera, 951s, 955, 996s, 987s, 986s, 997s, BMW 5x, C36, C63, XJR, S8, Maserati Coupe, GT500, etc |
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Banned
Join Date: Sep 2006
Location: South of Heaven
Posts: 21,159
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Oh yeah? Hmmmm....i have diesel certs.
But i HATE that field. Horrible way to make a living. Jeff my old man has zero mechanical skills. He's a sales oriented type guy. |
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Too big to fail
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Businesses and/or governments need to be creating jobs. REAL jobs, not phony, temporary or part-time "stimulus" ones.
Bingo. The problem is, a lot of companies are laying off like crazy to protect profits and boost bonuses.
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"You go to the track with the Porsche you have, not the Porsche you wish you had." '03 E46 M3 '57 356A Various VWs |
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I'm with Bill
Join Date: Feb 2005
Location: Jensen Beach, FL
Posts: 13,028
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The Inventory is not done being cleared out and we are a long way off from that happening.
http://www.tcpalm.com/news/2009/jul/25/in-todays-treasure-coast-housing-market-cash-is/ Quote:
For every home I survey for a closing 4 more around it sit empty or abandoned. We have a long way to go here before a builder will be needed. Sadly for every house I survey, which is about 5-6 a day, that equals $150K or more in losses for a bank. Which means the bleeding has not stopped in the financial world.
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1978 Mini Cooper Pickup 1991 BMW 318i M50 2.8 swap 2005 Mini Cooper S 2014 BMW i3 Giga World - For sale in late March |
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AutoBahned
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for homework, list all the Leading Indicators...
then list al the Lagging Indicators... |
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Dog-faced pony soldier
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In a normal recession or what one expects to see for this one (yes, there are differences).
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A car, a 911, a motorbike and a few surfboards Black Cars Matter |
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12-14 bucks an hour? I was making that 20 years ago. If diesel mechanics or any mechanics are only getting 12-14 bucks an hour, then why are shops charging 65-125 bucks an hour for their mechanics. I know there are some additional costs for a shop, but 8-9 time the base rate? |
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Registered
Join Date: Sep 2005
Location: So. Cal.
Posts: 11,248
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Here a leading indicator for you - we have had a buss load of housing starts in the IE since late January. We have more than doubled our field labor. Go figure...
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David 1972 911T/S MFI Survivor |
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Banned
Join Date: Sep 2006
Location: South of Heaven
Posts: 21,159
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Banned
Join Date: Sep 2006
Location: South of Heaven
Posts: 21,159
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