Turkeys, raccoons, Seattle's economy as a bellwether

I am hearing more turkey gobbling when I am outside than I have ever heard in my life.

I am also catching far fewer raccoons and 'possum in my traps.

Raccoon populations are known to go up-and-down. The down is often caused by distemper. Distemper is very closely related to the virus that causes measles in humans and it can spread like wildfire when the raccoon population density is high or when an event like drought limits the number of food sources and the local population is concentrated at those sources. That is, the trash-dumpster at the local restaurant  or the porch of "that nice lady who feeds wildlife" can become Grand Central Station for raccoons.

The virus attacks a succession of tissue types. The first tissue on the menu are the lymph nodes. Those are the organs that product the majority of the antibodies that suppress bacteria and viruses.

That entire "the population can go up and down" makes me think of the stock market. Yes Virginia, it can go down.

Seattle's economy

A report came out from the Downtown Seattle Association that claims the "Jumpstart" tax has had a chilling effect on the Seattle economy.

When passed in 2020, city leaders said Seattle’s record new “JumpStart” business taxes would generate progressive revenue from Seattle’s largest, highest-paying businesses to fund COVID-19 relief (an important need at the time), affordable housing, essential city services, long-term economic recovery and resiliency, while jumpstarting economic prosperity throughout the city.   

But since 2020, what we have seen in downtown Seattle is not a “jump start”, but instead, a slowdown. Since being implemented, downtown Seattle has lost around 30,000 jobs. The office vacancy rate increased to 32% in the downtown core. And more than $10 billion in office value has been lost.  

Meanwhile, in Bellevue, dating back to 2020, the city has seen more jobs come to its core, lower office vacancy, and the stability of office building values. This provides a stark tale of two cities and two tax environments just miles apart.   Link

Direct Foreign Investment for the Greater Seattle Metro Area by year. Raw numbers look impressive (Source)

 

The numbers are very scary after adjusting for inflation to 2015 dollars. According to Financial Times, Seattle went from #2 metro region for "Attractiveness for Foreign Investment" to #13.

I used 3% inflation for 2015-2019 and 10% inflation for 2020-2025. You can quibble about exact inflation numbers all day long. I gave you the numbers so you can use your own, favorite inflation numbers and create your own chart.

One of the traps that growth-enterprises can fall into is that investment that is flooding in can mask the fact that the enterprise is not viable, that it is not making a "true" profit. The same thing can happen to a regional economy. Investment flooding in stimulates high-paying construction jobs and speculative real-estate feeding frenzies.

After the hysteria has run its course, the region is "over-built" and under-tenanted. The organic, home-grown business activity cannot sustain the cost of maintaining the grandiose monuments that were erected.

Seattle is also bucking a secular trend. AI is replacing a lot of coders who used to write generic code for apps. On the favorable side for Seattle, Boeing will be getting a lot of contracts to backfill losses in Iran and inventory gifted to Ukraine.

Not just Seattle

A breakdown of Phoenix, AR economy

We are living in a bubble-economy. Politicians of all stripes and colors have been goading the Fed to pump the economy full of liquidity since 1999.

That money has been frantically looking for parking spaces in safe-havens while the perpetual malcontents have been agitating to "get whats mine".

Thinking of one of my friends whose net-worth is in the neighborhood of $10M...what good is it to have that much money if all of the inventory of the drug-store has been stolen...either from the shelves, while in transit or at the point of manufacture?

I am not slagging him. He has properties in several different locations, including a building the small town where his wife grew up. He has many physical skills that could come in handy. What will be devastating to him will be liquidity traps if/when things go into the septic tank. Bankruptcy proceedings could take years, especially if the courts get flooded with multiple, complicated bankruptcies. Outcomes in court are politically skewed and precedent is now considered just a vague suggestion.