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A Mass Exodus Away From Big Cities On Both Coasts

A Mass Exodus Away From Big Cities On Both Coasts

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A Mass Exodus Away From Big Cities On Both Coasts Tyler Durden Mon, 08/17/2020 - 18:30

Authored by Michael Snyder via The Economic Collapse blog,

In all of U.S. history, we have never seen anything like “the mass exodus of 2020”.  Hundreds of thousands of people are leaving the major cities on both coasts in search of a better life.  Homelessness, crime and drug use were already on the rise in many of our large cities prior to 2020, but many big city residents were willing to put up with a certain amount of chaos in order to maintain their lifestyles.  However, the COVID-19 pandemic and months of civil unrest have finally pushed a lot of people over the edge.  Moving companies on both coasts are doing a booming business as wealthy and middle class families flee at a blistering pace, and most of those families do not plan to ever return.

Los Angeles is a perfect example of what I am talking about.  Once upon a time it attracted wealthy and famous people from all over the globe, but in 2020 it is “a city on the brink“…

Today, Los Angeles is a city on the brink. ‘For Sale’ signs are seemingly dotted on every suburban street as the middle classes, particularly those with families, flee for the safer suburbs, with many choosing to leave LA altogether.

British-born Danny O’Brien runs Watford Moving & Storage. ‘There is a mass exodus from Hollywood,’ he says.

Almost half of the entire homeless population of the entire country now lives in the state of California, and a large proportion of them are addicted to drugs.  Needless to say, this has created a nightmarish environment

Junkies and the homeless, many of whom are clearly mentally ill, walk the palm-lined streets like zombies – all just three blocks from multi-million-dollar homes overlooking the Pacific.

Stolen bicycles are piled high on pavements littered with broken syringes.

Could you imagine trying to raise a family in such a community?

I certainly couldn’t.

And the worse economic conditions become, the worse the problem gets.  Crime is skyrocketing in L.A., and some residents have been shocked to discover strangers actually “defecating in their front gardens”

TV bulletins are filled with horror stories from across the city; of women being attacked during their morning jog or residents returning home to find strangers defecating in their front gardens.

Of course Los Angeles is definitely not the only major city dealing with such issues.

On a per capita basis, drug use is even worse in San Francisco, and it is being reported that there is “a mass exodus of people looking to get out of San Francisco real estate”

According to online real estate company Zillow, there is a mass exodus of people looking to get out of San Francisco real estate – as the housing market is on fire in the Bay Area suburbs, all the way to Lake Tahoe.

According to the company’s “2020 Urban-Suburban Market Report,” home prices in the city have fallen 4.9% year-over-year, while inventory has jumped 96% during the same period, as a flood of new listings hit the market.

In the end, a lot of people may have to take losses on their homes, but it will be worth it simply to get out of California.

And the state legislature has apparently decided that the mass exodus is not happening fast enough, because a bill is being introduced that would impose a new “wealth tax” on the very wealthy

Fast forward to today when the ultra-liberal state of California is now ready to take this “socialist” idea from concept to the implementation phase, with the SF Chronicle reporting that a group of CA state lawmakers on Thursday proposed a first-in-the-nation state wealth tax that would hit about 30,400 California residents and raise an estimated $7.5 billion for the general fund.

The proposed tax rate would be 0.4% of net worth (most likely ended up far higher), excluding directly held real estate, that exceeds $30 million for single and joint filers and $15 million for married filing separately.

In the old days, a lot of Californians would just head north to Portland or Seattle, but those two cities are not exactly desirable options at this point.

The civil unrest in Seattle never seems to end, and Acting Department of Homeland Security Secretary Chad Wolf recently said that there had been “twelve official riots” in the first ten days after federal law enforcement officials left Portland.

Sadly, the east coast has experienced plenty of chaos as well, and the mass exodus out of New York City has been particularly dramatic.

In a previous article, I discussed the fact that the the New York Times had reported that 420,000 New Yorkers had moved out of the city between March 1st and May 1st.

But the exodus certainly didn’t end there.

According to the local Fox affiliate, between May and July there was “a 95 percent year over year increase in interest in moving out of Manhattan”…

According to the most recent data from United Van Lines, between May and July, there was a 95 percent year over year increase in interest in moving out of Manhattan. That compares with a 19 percent increase in moving interest in the U.S., overall.

The top destinations for people who moved out of New York City between March and August were Florida and California – which together comprised 28 percent of relocations. Texas and North Carolina made up 16 percent of moves.

And it isn’t just residents that are leaving.

Business after business is shutting down, and that includes some of the most iconic retailers in the city

J.C. Penney and Neiman Marcus, the anchor tenants at two of the largest malls in Manhattan, recently filed for bankruptcy and announced that they would shutter those locations.

The Subway restaurant chain has already closed dozens of locations in New York City in recent months,

Le Pain Quotidien has permanently closed several of its 27 stores in the city and plans to leave others closed until more people return to the streets, an executive at the chain’s parent, Aurify Brands, told the Times.

Earlier today, I watched a video that someone had taken of all the boarded up shops along 5th Avenue.

If you have not seen that video yet, you can watch it right here.

I couldn’t believe what I was seeing.  At one time 5th Avenue was a playground for the elite of the world, but now it essentially looks “like a demilitarized zone”

De Blasio’s New York has finally hit an all-time low: the once bustling city is now on the verge of looking like a demilitarized zone. Between the pandemic and the riots in the city, iconic 5th Avenue now looks more like a dystopian nightmare in a recently shot video posted to Twitter.

The video follows a car driving down a deserted 5th Avenue, with almost all of the area’s high end stores boarded up and shut down. There are few people seen on what is usually a busy street.

“Look at everything. Everything’s boarded up. Even the hotel. Boarded up,” the video’s narrator, who is obviously fed up with how the city looks, says.

In about six months, most of the progress that New York City has made since the dark days of the 1970s and 1980s has completely disappeared.

Homelessness and poverty are both exploding, and crime rates are shooting into the stratosphere.

If you can believe it, the number of shootings in July was 177 percent higher than for the same month last year.

If the deplorable conditions in our major cities were just going to be temporary, I don’t believe that we would be seeing such a mass exodus.

But at this point it should be clear to all of us that things aren’t going to turn around any time soon, and many people are convinced that things are just going to continue to get even worse.

Our major cities are degenerating right in front of our eyes, and there doesn’t seem to be any hope of reversing this process now that it has started.

In life, the decisions that we make always have consequences, and the consequences for the decisions that we have made as a nation as a whole will be very bitter indeed.

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Stock Market Today: Stocks turn lower as factory inflation spikes, retail sales miss target

Stocks will navigate the last major data releases prior to next week’s Fed rate meeting in Washington.

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Check back for updates throughout the trading day

U.S. stocks edged lower Thursday following a trio of key economic releases that have added to the current inflation puzzle as investors shift focus to the Federal Reserve's March policy meeting next week in Washington.

Updated at 9:59 AM EDT

Red start

Stocks are now falling sharply following the PPI inflation data and retail sales miss, with the S&P 500 marked 18 points lower, or 0.36%, in the opening half hour of trading.

The Dow, meanwhile, was marked 92 points lower while the Nasdaq slipped 67 points.

Treasury yields are also on the move, with 2-year notes rising 5 basis points on the session to 4.679% and 10-year notes pegged 7 basis points higher at 4.271%.

Updated at 9:44 AM EDT

Under Water

Under Armour  (UAA)  shares slumped firmly lower in early trading following the sportswear group's decision to bring back founder Kevin Plank as CEO, replacing the outgoing Stephanie Linnartz.

Plank, who founded Under Armour in 1996, left the group in May of 2021 just weeks before the group revealed that it was co-operating with investigations from both the Securities and Exchange Commission and the U.S. Department of Justice into the company's revenue recognition accounting.

Under Armour shares were marked 10.6% lower in early trading to change hands at $7.21 each.

Source: Under Armour Investor Relations

Updated at 9:22 AM EDT

Steely resolve

U.S. Steel  (X)  shares extended their two-day decline Thursday, falling 5.75% in pre-market trading following multiple reports that suggest President Joe Biden will push to prevent Japan's Nippon Steel from buying the Pittsburgh-based group.

Both Reuters and the Associated Press have said Biden will express his views to Prime Minister Kishida Yuko ahead of a planned State Visit next month at the White House. 

Related: US Steel soars on $15 billion Nippon Steel takeover; United Steelworkers slams deal

Updated at 8:52 AM EDT

Clear as mud

Retail sales rebounded last month, but the overall tally of $700.7 billion missed Street forecasts and suggests the recent uptick in inflation could be holding back discretionary spending.

A separate reading of factory inflation, meanwhile, showed prices spiking by 1.6%, on the year, and 0.6% on the month, amid a jump in goods prices.

U.S. stocks held earlier gains following the data release, with futures tied to the S&P 500 indicating an opening bell gain of 10 points, while the Dow was called 140 points higher. The Nasdaq, meanwhile, is looking at a more modest 40 point gain.

Benchmark 10-year Treasury note yields edged 3 basis points lower to 4.213% while two-year notes were little-changed at 4.626%.

Stock Market Today

Stocks finished lower last night, with the S&P 500 ending modestly in the red and the Nasdaq falling around 0.5%. The declines came amid an uptick in Treasury yields tied to concern that inflation pressures have failed to ease over the opening months of the year.

A better-than-expected auction of $22 billion in 30-year bonds, drawing the strongest overall demand since last June, steadied the overall market, but stocks still slipped into the close with an eye towards today's dataset.

The Commerce Department will publish its February reading of factory-gate inflation at 8:30 am Eastern Time. Analysts are expecting a slowdown in the key core reading, which feeds into the Fed's favored PCE price index.

Retail sales figures for the month are also set for an 8:30 am release as investors search for clues on consumer strength, tied to a resilient job market. Those factors could give the Fed more justification to wait until the summer months to begin the first of its three projected rate cuts.

"The case for a gradual but sustained slowdown in growth in consumers’ spending from 2023’s robust pace is persuasive," said Ian Shepherdson of Pantheon Macroeconomics. 

"Most households have run down the excess savings accumulated during the pandemic, while the cost of credit has jumped and last year’s plunge in home sales has depressed demand housing-related retail items like furniture and appliances," he added.

Benchmark 10-year Treasury yields are holding steady at 4.196% heading into the start of the New York trading session, while 2-year notes were pegged at 4.628%.

With Fed officials in a quiet period, requiring no public comments ahead of next week's meeting in Washington, the U.S. dollar index is trading in a narrow range against its global peers and was last marked 0.06% higher at 102.852.

On Wall Street, futures tied to the S&P 500 are indicating an opening bell gain of around 19 points, with the Dow Jones Industrial Average indicating a 140-point advance.

The tech-focused Nasdaq, which is up 7.77% for the year, is priced for a gain of around 95 points, with Tesla  (TSLA)  once again sliding into the red after ending the Wednesday session at a 10-month low.

In Europe, the regionwide Stoxx 600 was marked 0.35% higher in early Frankfurt trading, while Britain's FTSE 100 slipped 0.09% in London.

Overnight in Asia, the Nikkei 225 gained 0.29% as investors looked to a key series of wage negotiation figures from key unions that are likely to see the biggest year-on-year pay increases in three decades.

The broader MSCI ex-Japan benchmark, meanwhile, rose 0.18% into the close of trading. 

Related: Veteran fund manager picks favorite stocks for 2024

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Walmart and Target make key self-checkout changes to fight theft

Both chains are making changes customers may not like, but self-checkout isn’t going anywhere, according to one industry expert.

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In parts of the world, public bathrooms come with a charge, but people pay on the honor system. The money charged allows for better upkeep of the facilities and most people don't mind dropping a small bill or some coins into a lockbox and many of the people who don't are likely dealing with larger problems.

The honor system, however, requires honor. It's based on the idea that most people are trustworthy and that they will pay their fair share.

Related: Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

In the case of a bathroom, people cheating the system are only stealing a low-value service. In the case of self-checkout, a variation on the honor system, people looking to steal by "forgetting" to scan an item can be a very expensive problem.

That has led retailers including Target, Walmart, and Dollar General to make changes. Target has limited the amount of items you can scan at self-checkout at some stores while Dollar General has literally eliminated it in some locations.

Walmart, like Target, has experimented with item limits and limiting the hours of operation for self-checkout. Now, in some stores, the chain has decided to designate some of its self-checkout stations for Walmart+ members and delivery drivers using the Spark app.

Advantage Solutions General Manager Andy Keenan answered some questions about Walmart, self-checkout, and theft from TheStreet via email.     

Target has made self-checkout changes at select stores.

Image source: John Smith/VIEWpress.

What Walmart's self-checkout changes mean

TheStreet: What are the benefits of reserving self-checkout registers for Spark drivers and Walmart+ customers?

Keenan: The benefits include exclusivity and perks of membership, speed, and convenience when shopping.

TheStreet: If this rolls out more broadly, what do you anticipate being the impact on non-Walmart+ customers?

Keenan: There is the potential for non-Walmart+ customers to become agitated, they are losing convenience because they are not enrolled. Customers who are looking for convenience will have fewer options for speed to check out. 

TheStreet: Do lane restrictions like limiting lanes to 10 items or fewer help reduce time spent waiting in lines?

Keenan: Yes, but retailers must have a diverse amount of check lane options including 10 items or fewer to ensure that the speed of checkout actually transpires.

TheStreet: Do you believe self-checkout is leading to partial shrink? If so, do you think that this move to shut off self-checkout lanes will help prevent theft in the future?

Keenan: Yes, self-checkout is leading to partial shrink. We believe this tends to be more due to errors in scanning and intentional theft. 

There are already front-end transformation tests going on in stores, reducing the number of self-checkouts and shifting back to cashier checkouts in order to measure the reduction in shrink. Early indicators show that a move back to cashier checkouts combined with other shrink initiatives will help prevent theft.

Self-checkout is not going away

While changes are ongoing, Keenan believes self-checkout is here to stay.

“Self-checkout is not, as one recent article called it, a failed experiment. It’s actually part of the next evolution of the retail customer experience, and evolutions take time,” Keenan said in a web post about the findings of the 2024 Advantage Shopper Outlook survey.

He makes it clear that rising labor costs and struggles to find workers make some for of self-checkout inevitable.

“Since the pandemic, there’s been a revolution on hourly labor,” Keenan said. “Labor in certain markets that would cost you $16 an hour now costs you $19 or $20 an hour, and it’s a gig economy. The people who once stood at a checkout stand in the front of a store are now driving for Instacart or DoorDash because the hours are more flexible. They want to make their own schedule, and it’s varied work. Today, most retailers can’t offer that.”

Basically, while there are kinks to work out, self-checkout simply makes sense for retailers.

“The notion that we’re going to pivot away from technology that helps offset labor needs and will ultimately continue to improve customer experience because of some challenges is far-fetched. We need to continue to embrace the technology and realize that it may always be imperfect, but it will always be evolving. The noise that, ‘Oh, self-checkout might not be working,’ that’s just a moment in time,” he added.

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Hitting Home: Housing Affordability in the U.S.

The Issue:
Housing is becoming unaffordable to a widening swathe of the American population. This deteriorating affordability directly impacts American…

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The Issue:

Housing is becoming unaffordable to a widening swathe of the American population. This deteriorating affordability directly impacts American lives, including where people choose to live and work. It has also been cited as a major contributor to key social problems like rising homelessness and worsening child wellbeing.

The Facts:

  • Median house prices are now 6 times the median income, up from a range of between 4 and 5 two decades ago. In cities along the coasts, the numbers are higher, exceeding 10 in San Francisco. 
  • The ratio of median rents to median income has also crept from 25 percent to 30 percent in two decades. 
  • Households — renters in particular — are increasingly cost-burdened, having to spend more than 30% of their income on rent, mortgage and other housing needs. Among homeowners, about 40 percent of those in the $35-49 income range are cost-burdened. The share of cost-burdened renters in that income range has risen sharply from under 40 percent of households in 2010 to over 60 percent today (see chart). 
  • Historically, rural and interior areas of the country have been more affordable. But, even prior to the pandemic, migration toward these locations has helped drive faster house price appreciation than in more expensive regions.
  • Demographic developments have contributed to the demand-supply imbalance. Supply is crimped by more older Americans opting to age in place. On the demand side, the biggest driver is new household formation. Americans formed about a million new households a year between 2015-2017, but the pace has almost doubled according to the most recent data, largely reflecting a pickup in household formation rates among millennials.
  • A long-standing lack of homebuilding, which partly reflects tight regulatory restrictions in many parts of the country, has also contributed to rising home prices. 
  • More recently, higher interest rates since 2022 have exacerbated these secular trends to make housing even more unaffordable. The mortgage rate on a 30-year home loan soared from 3 ½ percent in early 2022 to nearly 8% in October 2023 as the Fed raised policy interest rates; the mortgage rate had only eased to about 7% in March 2024 as the tightening cycle had peaked. The problem is compounded by mortgage lock-in: higher interest rates have left many homeowners — many of whom bought homes or refinanced at the lows of 2020-21 — with cheaper-than-market mortgages, reluctant to sell their house and reset their mortgage at current, higher rates.

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