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Cosmetic treatment review platform RealSelf lays off 11 employees

RealSelf, the Seattle-based cosmetic treatment review platform, laid off 11 employees, or about 4.7% of its workforce this week. Chief Marketing Officer…

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(Logo courtesy of RealSelf)

RealSelf, the Seattle-based cosmetic treatment review platform, laid off 11 employees, or about 4.7% of its workforce this week.

Chief Marketing Officer Hailey Sullivan told GeekWire that the company restructured its marketing and brands organization.

“These changes will continue to support RealSelf’s strategy to deliver innovative value to our providers/specialists and industry brand partners, to expand geographically, and to evolve our platform to better serve our consumers,” Sullivan said in an emailed statement. “These decisions are always difficult and never taken lightly. We are grateful to our past employees and for their dedication to RealSelf’s brand purpose to empower every person to realize their most confident self.”

The startup cut 13% of its workforce, or about 40 employees, at the beginning of the year. Newly appointed CEO Jeff Kizilbash said in a statement at the time that to continue to achieve its growth objectives, RealSelf was “aligning resources and investments across our new global footprint.”

Tech firms across various industries are laying off employees or freezing hiring as a way to curb expenses amid the current downturn. Seattle-area tech startups including Redfin, Convoy, Qumulo, Flyhomes and Esper have laid off employees in recent months.

RealSelf operates a Yelp-like marketplace business that helps people learn more about cosmetic procedures including botox, Invisalign, breast augmentation, liposuction and more. Founded in 2006, the company has information, patient reviews and photos, treatment costs and ratings, and thousands of verified doctors on its platform.

RealSelf saw its business impacted early in the pandemic but bounced back later in 2020. The company acquired two international cosmetic resource platforms last year: Your New Self and Tajmeeli.

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Apartment permits are back to recession lows. Will mortgage rates follow?

If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long.

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In Tuesday’s report, the 5-unit housing permits data hit the same levels we saw in the COVID-19 recession. Once the backlog of apartments is finished, those jobs will be at risk, which traditionally means mortgage rates would fall soon after, as they have in previous economic cycles.

However, this is happening while single-family permits are still rising as the rate of builder buy-downs and the backlog of single-family homes push single-family permits and starts higher. It is a tale of two markets — something I brought up on CNBC earlier this year to explain why this trend matters with housing starts data because the two marketplaces are heading in opposite directions.

The question is: Will the uptick in single-family permits keep mortgage rates higher than usual? As long as jobless claims stay low, the falling 5-unit apartment permit data might not lead to lower mortgage rates as it has in previous cycles.

From Census: Building Permits: Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,518,000. This is 1.9 percent above the revised January rate of 1,489,000 and 2.4 percent above the February 2023 rate of 1,482,000.

When people say housing leads us in and out of a recession, it is a valid premise and that is why people carefully track housing permits. However, this housing cycle has been unique. Unfortunately, many people who have tracked this housing cycle are still stuck on 2008, believing that what happened during COVID-19 was rampant demand speculation that would lead to a massive supply of homes once home sales crashed. This would mean the builders couldn’t sell more new homes or have housing permits rise.

Housing permits, starts and new home sales were falling for a while, and in 2022, the data looked recessionary. However, new home sales were never near the 2005 peak, and the builders found a workable bottom in sales by paying down mortgage rates to boost demand. The first level of job loss recessionary data has been averted for now. Below is the chart of the building permits.



On the other hand, the apartment boom and bust has already happened. Permits are already back to the levels of the COVID-19 recession and have legs to move lower. Traditionally, when this data line gets this negative, a recession isn’t far off. But, as you can see in the chart below, there’s a big gap between the housing permit data for single-family and five units. Looking at this chart, the recession would only happen after single-family and 5-unit permits fall together, not when we have a gap like we see today.

From Census: Housing completions: Privately‐owned housing completions in February were at a seasonally adjusted annual rate of 1,729,000.

As we can see in the chart below, we had a solid month of housing completions. This was driven by 5-unit completions, which have been in the works for a while now. Also, this month’s report show a weather impact as progress in building was held up due to bad weather. However, the good news is that more supply of rental units will mean the fight against rent inflation will be positive as more supply is the best way to deal with inflation. In time, that is also good news for mortgage rates.



Housing Starts: Privately‐owned housing starts in February were at a seasonally adjusted annual rate of 1,521,000. This is 10.7 percent (±14.2 percent)* above the revised January estimate of 1,374,000 and is 5.9 percent (±10.0 percent)* above the February 2023 rate of 1,436,000.

Housing starts data beat to the upside, but the real story is that the marketplace has diverged into two different directions. The apartment boom is over and permits are heading below the COVID-19 recession, but as long as the builders can keep rates low enough to sell more new homes, single-family permits and starts can slowly move forward.

If we lose the single-family marketplace, expect the chart below to look like it always does before a recession — meaning residential construction workers lose their jobs. For now, the apartment construction workers are at the most risk once they finish the backlog of apartments under construction.

Overall, the housing starts beat to the upside. Still, the report’s internals show a marketplace with early recessionary data lines, which traditionally mean mortgage rates should go lower soon. If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long and restrictive policy by the Fed created a recession as we have seen in previous economic cycles.

The builders have been paying down rates to keep construction workers employed, but if rates go higher, it will get more and more challenging to do this because not all builders have the capacity to buy down rates. Last year, we saw what 8% mortgage rates did to new home sales; they dropped before rates fell. So, this is something to keep track of, especially with a critical Federal Reserve meeting this week.

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Young People Aren’t Nearly Angry Enough About Government Debt

Young People Aren’t Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes…

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Young People Aren't Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes seem to wake up in the morning in search of something to be outraged about. We are among the wealthiest and most educated humans in history. But we’re increasingly convinced that we’re worse off than our parents were, that the planet is in crisis, and that it’s probably not worth having kids.

I’ll generalize here about my own cohort (people born after 1981 but before 2010), commonly referred to as Millennials and Gen Z, as that shorthand corresponds to survey and demographic data. Millennials and Gen Z have valid economic complaints, and the conditions of our young adulthood perceptibly weakened traditional bridges to economic independence. We graduated with record amounts of student debt after President Obama nationalized that lending. Housing prices doubled during our household formation years due to zoning impediments and chronic underbuilding. Young Americans say economic issues are important to us, and candidates are courting our votes by promising student debt relief and cheaper housing (which they will never be able to deliver).

Young people, in our idealism and our rational ignorance of the actual appropriations process, typically support more government intervention, more spending programs, and more of every other burden that has landed us in such untenable economic circumstances to begin with. Perhaps not coincidentally, young people who’ve spent the most years in the increasingly partisan bubble of higher education are also the most likely to favor expanded government programs as a “solution” to those complaints.

It’s Your Debt, Boomer 

What most young people don’t yet understand is that we are sacrificing our young adulthood and our financial security to pay for debts run up by Baby Boomers. Part of every Millennial and Gen-Z paycheck is payable to people the same age as the members of Congress currently milking this system and miring us further in debt.

Our government spends more than it can extract from taxpayers. Social Security, which represents 20 percent of government spending, has run an annual deficit for 15 years. Last year Social Security alone overspent by $22.1 billion. To keep sending out checks to retirees, Social Security goes begging to the Treasury Department, and the Treasury borrows from the public by issuing bonds. Bonds allow investors (who are often also taxpayers) to pay for some retirees’ benefits now, and be paid back later. But investors only volunteer to lend Social Security the money it needs to cover its bills because the (younger) taxpayers will eventually repay the debt — with interest.

In other words, both Social Security and Medicare, along with various smaller federal entitlement programs, together comprising almost half of the federal budget, have been operating for a decade on the principle of “give us the money now, and stick the next generation with the check.” We saddle future generations with debt for present-day consumption.

The second largest item in the budget after Social Security is interest on the national debt — largely on Social Security and other entitlements that have already been spent. These mandatory benefits now consume three quarters of the federal budget: even Congress is not answerable for these programs. We never had the chance for our votes to impact that spending (not that older generations were much better represented) and it’s unclear if we ever will.

Young Americans probably don’t think much about the budget deficit (each year’s overspending) or the national debt (many years’ deficits put together, plus interest) much at all. And why should we? For our entire political memory, the federal government, as well as most of our state governments, have been steadily piling “public” debt upon our individual and collective heads. That’s just how it is. We are the frogs trying to make our way in the watery world as the temperature ticks imperceptibly higher. We have been swimming in debt forever, unaware that we’re being economically boiled alive.

Millennials have somewhat modest non-mortgage debt of around $27,000 (some self-reports say twice that much), including car notes, student loans, and credit cards. But we each owe more than $100,000 as a share of the national debt. And we don’t even know it.

When Millennials finally do have babies (and we are!) that infant born in 2024 will enter the world with a newly minted Social Security Number and $78,089 credit card bill for Granddad’s heart surgery and the interest on a benefit check that was mailed when her parents were in middle school. 

Headlines and comments sections love to sneer at “snowflakes” who’ve just hit the “real world,” and can’t figure out how to make ends meet, but the kids are onto something. A full 15 percent of our earnings are confiscated to pay into retirement and healthcare programs that will be insolvent by the time we’re old enough to enjoy them. The Federal Reserve and government debt are eating the economy. The same interest rates that are pushing mortgages out of reach are driving up the cost of interest to maintain the debt going forward. As we learn to save and invest, our dollars are slowly devalued. We’re right to feel trapped.  

Sure, if we’re alive and own a smartphone, we’re among the one percent of the wealthiest humans who’ve ever lived. Older generations could argue (persuasively!) that we have no idea what “poverty” is anymore. But with the state of government spending and debt…we are likely to find out. 

Despite being richer than Rockefeller, Millennials are right to say that the previous ways of building income security have been pushed out of reach. Our earning years are subsidizing not our own economic coming-of-age, but bank bailouts, wars abroad, and retirement and medical benefits for people who navigated a less-challenging wealth-building landscape. 

Redistribution goes both ways. Boomers are expected to pass on tens of trillions in unprecedented wealth to their children (if it isn’t eaten up by medical costs, despite heavy federal subsidies) and older generations’ financial support of the younger has had palpable lifting effects. Half of college costs are paid by families, and the trope of young people moving back home is only possible if mom and dad have the spare room and groceries to make that feasible.

Government “help” during COVID-19 resulted in the worst inflation in 40 years, as the federal government spent $42,000 per citizen on “stimulus” efforts, right around a Millennial’s average salary at that time. An absurd amount of fraud was perpetrated in the stimulus to save an economy from the lockdown that nearly ruined itTrillions in earmarked goodies were rubber stamped, carelessly added to young people’s growing bill. Government lenders deliberately removed fraud controls, fearing they couldn’t hand out $800 billion in young people’s future wages away fast enough. Important lessons were taught by those programs. The importance of self-sufficiency and the dignity of hard work weren’t top of the list.

Boomer Benefits are Stagnating Hiring, Wages, and Investment for Young People

Even if our workplace engagement suffered under government distortions, Millennials continue to work more hours than other generations and invest in side hustles and self employment at higher rates. Working hard and winning higher wages almost doesn’t matter, though, when our purchasing power is eaten from the other side. Buying power has dropped 20 percent in just five years. Life is $11,400/year more expensive than it was two years ago and deficit spending is the reason why

We’re having trouble getting hired for what we’re worth, because it costs employers 30 percent more than just our wages to employ us. The federal tax code both requires and incentivizes our employers to transfer a bunch of what we earned directly to insurance companies and those same Boomer-busted federal benefits, via tax-deductible benefits and payroll taxes. And the regulatory compliance costs of ravenous bureaucratic state. The price paid by each employer to keep each employee continues to rise — but Congress says your boss has to give most of the increase to someone other than you. 

Federal spending programs that many people consider good government, including Social Security, Medicare, Medicaid, and health insurance for children (CHIP) aren’t a small amount of the federal budget. Government spends on these programs because people support and demand them, and because cutting those benefits would be a re-election death sentence. That’s why they call cutting Social Security the “third rail of politics.” If you touch those benefits, you die. Congress is held hostage by Baby Boomers who are running up the bill with no sign of slowing down. 

Young people generally support Social Security and the public health insurance programs, even though a 2021 poll by Nationwide Financial found 47 percent of Millennials agree with the statement “I will not get a dime of the Social Security benefits I have earned.”

In the same survey, Millennials were the most likely of any generation to believe that Social Security benefits should be enough to live on as a sole income, and guessed the retirement age was 52 (it’s 67 for anyone born after 1959 — and that’s likely to rise). Young people are the most likely to see government guarantees as a valid way to live — even though we seem to understand that those promises aren’t guarantees at all.

Healthcare costs tied to an aging population and wonderful-but-expensive growth in medical technologies and medications will balloon over the next few years, and so will the deficits in Boomer benefit programs. Newly developed obesity drugs alone are expected to add $13.6 billion to Medicare spending. By 2030, every single Baby Boomer will be 65, eligible for publicly funded healthcare.

The first Millennial will be eligible to claim Medicare (assuming the program exists and the qualifying age is still 65, both of which are improbable) in 2046. As it happens, that’s also the year that the Boomer benefits programs (which will then be bloated with Gen Xers) and the interest payments we’re incurring to provide those benefits now, are projected to consume 100 percent of federal tax revenue.

Government spending is being transferred to bureaucrats and then to the beneficiaries of government spending who are, in some sense, your diabetic grandma who needs a Medicare-paid dialysis treatment, but in a much more immediate sense, are the insurance companiespharma giants, and hospital corporations who wrote the healthcare legislation. Some percentage of every college graduate’s paycheck buys bullets that get fired at nothing and inflating the private investment portfolios of government contractors, with dubious, wasteful outcomes from the prison-industrial complex to the perpetual war machine.

No bank or nation in the world can lend the kind of money the American government needs to borrow to fulfill its obligations to citizens. Someone will have to bite the bullet. Even some of the co-authors of the current disaster are wrestling with the truth. 

Forget avocado toast and streaming subscriptions. We’re already sensing it, but we haven’t yet seen it. Young people are not well-informed, and often actively misled, about what’s rotten in this economic system. But we are seeing the consequences on store shelves and mortgage contracts and we can sense disaster is coming. We’re about to get stuck with the bill.

Tyler Durden Tue, 03/19/2024 - 20:20

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Spread & Containment

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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