posted by Mike Madison at 12:59 PM /
Is there evidence of recession in the Mt. Lebanon economy? Report, if you can, from the front lines of jobs and job searching, restaurants and other small business, banking, real estate, economic development, not-for-profit fundraising, and so on.
Labels: economy
11 Comments:
Well, I can tell you that I am not going out nearly as much to support the local businesses. However, it is not because of my Ameritrade balance. I am more concerned about imminent tax hikes as Barry changes the USA into a mini Allegheny County.
Rich Sullivan or "Joe the Doctor"
Rich,
Or maybe you're bracing for McCain to start taxing your healthcare benefits?
Wow, that $5,000 tax credit is going to go reeaall far covering my family's healthcare. Wake up. We've had 8 years of your precious tax cuts for people who don't need them and look what it's gotten us. What more evidence do you need that trickle-down doesn't work?
This comment is a bit off point from the original post, but it follows on what Tim just said. Specifically, I'm firmly undecided at this point in the Presidential race. McCain, while impressive at times, often seems dangerously on edge. 8 weeks ago, no one could have picked Palin out of a lineup let alone given her a seat on Air Force One.
But nothing frustrates me more than when I hear Obama or his supporters refer to the "failed policies of the last 8 years."
Does their ability to point out the obvious entitle them to my vote? I often think that Obama supporters aren't so much for him and his policies, but are simply against Bush. Is that the right way to elect a President?
Can Obama "change" everything that has occured under Bush? How?
I was aware that the post might trigger this sort of back and forth.
I was hoping, however, to elicit some answers to the question!
My bad Mike, sorry. From what I can tell, Lebo's restaurants appear to be full, but not packed. We walked right in and sat down at Atrias last night at 7:00, which is pretty rare. Not sure if that's the best indicator though. There's also an interesting piece in today's P-G about someone who recently flipped an 80 year old house in Lebo for a nice profit. The only real negative that I've heard so far is that a neighbor's recent college graduate son could not buy a car because he had a credit score below 700. Don't they all? Perhaps that's a more ominous sign than anything else.
Tighter personal credit is probably a good thing. Fresh college grads probably shouldn't be buying new cars anyway.
I have seen more recession-like symptoms in other parts of Pittsburgh (e.g., more empty retail space out in Robinson), but not as much here.
I have seen slower traffic at some restaurants, but places like Pamela always seem to be packed to overflowing.
My guess is, as Dave indicated, the initial pinch is being felt on big-ticket items and less so on smaller discretionary spending.
We are however, getting weekly offers to refinance our mortgage.
Dave: I'm stunned that you're undecided. Re Obama: He has indicated pretty clearly that we will return to much of the fiscal policy of the Clinton Admin, chiefly paying down our debt aggressively. Also energy independence. Those are biggies for me. I would also love to see a healthcare system that didn't clobber small business owners. McCain's I fear would make it worse.
Jeff, if a well-educated, newly minted college grad with a good job can't buy a new Ford, then please tell me who should. I suppose he should strive to be a career apartment renter as well?
I think that the question isn't what the fresh college grad should or shouldn't do or want. The question is whether Ford Credit (or GMAC etc. etc.) should lend him the money to buy a new car. Perhaps that's what both of you meant, but it's helpful to frame the issue from the point of view of the lender, rather than from the point of view of the borrower/buyer.
Some fresh college grads offer credit risks that justify lending close to the full cost of the car, at a new car interest rate. Many offer credit risks that justify lending something closer to the cost of a used car, at a used car rate. Many more likely offer credit risks that justify turning them down entirely, which means that if they want a new car (or any car), they need to get their families to pay for it, or they need to wait and save (and perhaps rent rather than buy a place to live, something that seems entirely sensible), or both.
Whether a "good job" on graduation puts the college grad in the first category, or the second, or the third, will depend on a lot of factors. Among those factors, history is likely to dominante potential. Regardless of what we might like to be the case, increasingly that "good job" college grad with no solid track record will end up in the third category. Keep that good job for a year, then credit will flow more freely.
Who should, indeed? Financing an asset that is guaranteed to depreciate by 50-70% over the term of the loan has never seemed especially rational to me. Without a big down payment, many people end up "upside-down" on their cars.
The current financial woes stem in part from the rise of a belief that people have a "right" to take on debt in order to have things that the feel that they deserve but which they don't actually have enough money to buy. Fresh college grads seem particularly susceptible to this kind of irrationality. The world won't end if they go back to having to save money and buy used cars.
Regardless, if this kid has a special passion for cars, then I can understand wanting to spend his disposable income on one. Even so, I think that as a rule interest on debt is a crappy thing for a young person to spend their money on. If he doesn't have a passion for cars, but he can't think of anything else under the sun that he'd rather spend the money on (hobbies? travel? music? art? political activism?) then he'd be better off investing the money. (Or paying down the principal on his student loans. Debt is essentially a negative investment.)
As for homes? If he ends up living in one of many regions outside of Pittsburgh, then he should probably plan to rent for a while, since the cost of home ownership is far greater than the cost of renting in most of the country right now. Regardless of where he lives or when he buys, I don't think he (or anyone) should buy a home unless he (a) has a 20% down payment, and (b) plans to own the home for at least 10 years. Otherwise, PMI, maintenance, and transaction costs make hown ownership a money-losing proposition on-par with renting (and far more hassle).
I'll add to this as a business owner on Washington Rd that sales are most definitely down from last year. (and other people on the street have agreed) I still have traffic, but people are absolutely thinking much harder about their purchases and whether they really "need" something. I am feeling the crunch for sure. So, if you are going to go out and buy something....PLEASE support the little people!
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