<story><title>U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession</title><url>https://www.bloomberg.com/news/articles/2020-04-29/u-s-economy-shrinks-at-4-8-pace-signaling-start-of-recession</url></story><parent_chain><item><author>baron_harkonnen</author><text>Tech people will be hit much harder by this than they think. The STEM world is largely in denial because ultimately SV grew because of the last major recession. That won&amp;#x27;t be happening this time.&lt;p&gt;Startups are having massive layoffs right now, and each week bring companies further and further down the chain lay people off. I strongly suspect we&amp;#x27;ll see more major layoffs next week.&lt;p&gt;Most big tech companies are driven by either consumer spending and advertising. Before 2008 at lot of these companies still had not capture their full market share, so even in a recession there was room for growth. Now profits in these companies are based on market dominance. Even the big names will likely take a hit as the severity of this recession starts to take hold.&lt;p&gt;Finally in the Bay Area there&amp;#x27;s the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units). The more ridiculous those total compensation packages may seem to outsiders the more they are built up from RSUs. In theory you should just live off base salary and RSU are the (very thick) icing on the cake, but this is unrealistic in SV. This stock part of the compensation goes a long way to paying for the insane housing in that region. Stocks drop and instantly Bay area income does to.&lt;p&gt;Tech will be effected, but a combination of naiveté and denial
make conversations here seem like tech is safe.</text></item><item><author>nimbius</author><text>This is anecdotal and it might come across as bitter and tonedeaf  as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores.  the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.&lt;p&gt;My job just cut benefits and hours but we&amp;#x27;re &amp;quot;essential.&amp;quot;
Remember those $1200 checks?  Im still waiting on mine.  Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.&lt;p&gt;A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick.  She &amp;#x27;works at the Amazon&amp;#x27; so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.&lt;p&gt;Shops are closing and nobody seems to care.  Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground &amp;quot;mysteriously&amp;quot; over the last two weeks.  Someone spray painted a swastika on the late night pizza joint.&lt;p&gt;So yeah this is a recession but it is so much worse than a lot of people think.  No school means poor kids roam the street like packs of feral dogs asking for money for food around here.  Half the country is out of work and the best Bloomberg can come up with is &amp;quot;its the start of a recession dont you know!&amp;quot;</text></item></parent_chain><comment><author>guiomie</author><text>100% agree. The housing market in the bay area will go down even more. The last year changes in tax rules such as lower deduction for mortgage interest and municipal taxes had already weakened the market. With RSUs going down, even less people will be able to buy housing, driving the price down. I think my house lost 8% in the last year, pre-COVID19. Sucks for me as a home owner, but I really believed the housing market was over-inflated. If we have layoffs, in FAANGs, I suspect a lot of folks will not be able to pay there mortgage.</text></comment>
<story><title>U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession</title><url>https://www.bloomberg.com/news/articles/2020-04-29/u-s-economy-shrinks-at-4-8-pace-signaling-start-of-recession</url></story><parent_chain><item><author>baron_harkonnen</author><text>Tech people will be hit much harder by this than they think. The STEM world is largely in denial because ultimately SV grew because of the last major recession. That won&amp;#x27;t be happening this time.&lt;p&gt;Startups are having massive layoffs right now, and each week bring companies further and further down the chain lay people off. I strongly suspect we&amp;#x27;ll see more major layoffs next week.&lt;p&gt;Most big tech companies are driven by either consumer spending and advertising. Before 2008 at lot of these companies still had not capture their full market share, so even in a recession there was room for growth. Now profits in these companies are based on market dominance. Even the big names will likely take a hit as the severity of this recession starts to take hold.&lt;p&gt;Finally in the Bay Area there&amp;#x27;s the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units). The more ridiculous those total compensation packages may seem to outsiders the more they are built up from RSUs. In theory you should just live off base salary and RSU are the (very thick) icing on the cake, but this is unrealistic in SV. This stock part of the compensation goes a long way to paying for the insane housing in that region. Stocks drop and instantly Bay area income does to.&lt;p&gt;Tech will be effected, but a combination of naiveté and denial
make conversations here seem like tech is safe.</text></item><item><author>nimbius</author><text>This is anecdotal and it might come across as bitter and tonedeaf  as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores.  the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.&lt;p&gt;My job just cut benefits and hours but we&amp;#x27;re &amp;quot;essential.&amp;quot;
Remember those $1200 checks?  Im still waiting on mine.  Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.&lt;p&gt;A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick.  She &amp;#x27;works at the Amazon&amp;#x27; so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.&lt;p&gt;Shops are closing and nobody seems to care.  Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground &amp;quot;mysteriously&amp;quot; over the last two weeks.  Someone spray painted a swastika on the late night pizza joint.&lt;p&gt;So yeah this is a recession but it is so much worse than a lot of people think.  No school means poor kids roam the street like packs of feral dogs asking for money for food around here.  Half the country is out of work and the best Bloomberg can come up with is &amp;quot;its the start of a recession dont you know!&amp;quot;</text></item></parent_chain><comment><author>lm28469</author><text>&amp;gt; Startups&lt;p&gt;The problem with a lot of startups is that they aren&amp;#x27;t making a profit when everything is going fine, let alone during a world wide pandemic, sometimes for years.&lt;p&gt;I see it as a wake up call for tech. It will suck for many people but in the long run it might be positive for the industry.</text></comment>