All da Aldis

When unlikely innovation reveals the mysteries of human behavior

Random Walk takes a quick look at the still middling macro picture, with some gloom, and then cheer, and then gloom for real estate (and especially commercial real estate) before experiencing enlightenment in a Florida Aldi. Finally, a quick check on venture’s self-licking ice cream cone. But, first, a plug:

Things we think

Goldilocks incoming

We still appear to be on track for a soft-landing, or what Bob Elliott has coined a “Goldilocks Landing,” i.e. where the news is just bad enough that it makes the Fed happy, but not so bad that it spells disaster—it is, as the fairy tale goes, “just right.” Goldilocks is pithier than Random Walk’s “middling” outcome, so we’re gonna roll with it.

Everything continues to be mediocre

The CliffsNotes are as follows:

• Holiday spending was generally weak and y-o-y spend is flat (taking inflation into account);

• Manufacturing is down (albeit to pre-pandemic levels), and

• Layoffs continue primarily in tech, but increasingly in finance and consumer, as well (although in general, the labor market is still pretty tight and jobless claims remain low):

Not-so-good, not-so-bad, and some things better than expected (which continues to be cause for concern).¹ As I recall, Goldilocks gets eaten in the end, but in the meantime, it could be worse.²

Remotish

One interesting aside (and an indicator that belts be tightening), is the growing spread between people who want remote jobs and people who want to hire remote workers:

Remote work is still way more prevalent than it was before, but things are starting to get decidedly more employer-friendly:

Housing Hold Steady, still holding steady

It’s still not a great time to be in the business of selling houses, but owning a house isn’t bad.

• Newly high rates have put the squeeze on would-be buyers, while would-be sellers continue to enjoy the benefits of whatever low rate they locked in when they bought their home (and therefore have little incentive to compromise on price).

• The net result has been a dramatic drop in sales volume, but less so price,³ which makes sense insofar as prices can’t really move in the absence of a trade.

• Consistent with that dynamic, it’s existing homes especially (h/t Liz Ann Sonders), that have just stopped moving, as opposed to new homes (where the seller is a professional builder that’s more inclined than a regular homeowner to cut prices and move on):

The low-to-no volume picture is bad for agents, brokers, etc. who make money on volume. The story is somewhat better, though, for people who simply have homes to sell. That’s because, structurally, the housing market isn’t that different than it was before, i.e. demand > supply. Inventory is still quite low—and markedly lower than it was before the pandemic:

Here’s another cut, courtesy of Goldman Sachs, which shows that outside of four buzzy markets, inventory is below pre-pandemic levels:⁴