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    Financial Stability Experts at the Fed Turn a Wary Eye on Commercial Real Estate

    A financial stability report from the Federal Reserve flagged concerns tied to rising interest rates, including in commercial real estate.Federal Reserve financial stability experts are on the lookout for weaknesses after a year of rising interest rates — and as they survey the potential risks confronting the system, they are increasingly watching office loans and other commercial real estate borrowing.Fed officials have lifted borrowing costs rapidly over the past year — to just above 5 percent from near-zero in early 2022 — to cool rapid inflation by slowing the economy. So far, the fallout from that abrupt change has been most obvious in the banking sector. A series of high-profile banks have collapsed or faced turmoil in recent weeks partly because they were poorly prepared for heftier borrowing costs.But Fed staff members and market experts whom they survey cited commercial real estate as another area worth watching in the central bank’s twice-annual Financial Stability Report, which was released Monday.The jump in interest rates over the past year “increases the risk” that commercial borrowers will not be able to refinance their loans when the loans reach the end of their term, Fed staff wrote in the report, noting that commercial real estate values remain “elevated.”“The magnitude of a correction in property values could be sizable and therefore could lead to credit losses by holders of C.R.E. debt,” the report said — noting that many of those holders are banks, and particularly smaller banks.“The Federal Reserve has increased monitoring of the performance of C.R.E. loans and expanded examination procedures for banks with significant C.R.E. concentration risk,” the report said.The Fed’s comments on commercial real estate amounted to muted watchfulness rather than a full-throated warning — but they come at a time when many investors and economists are closely monitoring the sector. The outlook for office buildings in downtown areas, where workers have not fully returned after a shift to remote work that began during the coronavirus pandemic, has emerged as a particular concern on Wall Street.The report included a survey of 25 professionals at broker-dealers, investment funds, research and advisory organizations, and universities, and those respondents ranked commercial real estate as their fourth-biggest financial stability concern — behind risks from interest rate increases, banking sector stress, and U.S.-China tensions, but ahead of Russia’s war in Ukraine and an impending fight in Congress about raising the debt limit.“Many contacts saw real estate as a possible trigger for systemic risk, particularly in the commercial sector, where respondents highlighted concerns over higher interest rates, valuations and shifts in end-user demand,” the report said.The Fed’s stability report also focused on risks to the economy that might come from the recent banking sector turmoil, which many officials are worried might prompt banks to pull back when it comes to lending. A Fed survey of bank loan officers released on Monday showed that demand for many types of loans has fallen in recent months, and it is becoming gradually harder to borrow.Worries could “lead banks and other financial institutions to further contract the supply of credit to the economy,” the Fed report said. “A sharp contraction in the availability of credit would drive up the cost of funding for businesses and households, potentially resulting in a slowdown in economic activity.”And if banks pull back in a dramatic way, it could have knock-on effects, the Fed report warned.“With a decline in profits of nonfinancial businesses, financial stress and defaults at some firms could increase,” the report said, especially because companies are very indebted — which puts them on dicier footing if business goes badly. More

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    Top Economist Leaves White House, and an Economy Not Yet ‘Normal’

    Cecilia Rouse says lingering effects of the coronavirus pandemic continue to haunt the recovery from recession — and drag on Americans’ optimism for the economy.WASHINGTON — Cecilia Rouse, the chair of the White House Council of Economic Advisers, stepped down on Friday to return to teaching at Princeton University. As a going-away present fit for an economist, her staff presented her with a chart showing every previous chair of the council, ranked by the number of jobs created during their tenure.Dr. Rouse’s name tops the list. In the two years since she was confirmed to be President Biden’s top economist, becoming the first Black chair of the council, the U.S. economy has created more than 11 million jobs. While that is a record for any presidential administration, it is also a direct result of the unusual circumstances of the fast-moving pandemic recession, which temporarily kicked millions of people out of the labor force before a swift recovery added back most of those jobs.As Dr. Rouse acknowledged in an interview this week, all that job growth has yet to restore a full sense of economic normality. Inflation remains much higher than normal. Consumers are pessimistic. The economy and the people who live and work in it, she said, are still to some degree stuck in the grip of the coronavirus pandemic.That phenomenon has scrambled markets like commercial real estate, Dr. Rouse said, exacerbated price growth and most likely hurt productivity across the economy by encouraging remote work. She said she believed in-person work was more likely to produce innovation that stokes economic growth.The effects have lingered longer than she initially expected.“We still have Covid with us,” Dr. Rouse said in her office at the Eisenhower Executive Office Building. “It is still impacting decisions that we’re making, whether it’s on our personal side, economic decisions.”She later added, “Sometimes I, in this course of the last few years, I wished my Ph.D. was in psychology.”In a wide-ranging interview reflecting on her time at the council, Dr. Rouse defended the Biden administration’s policy choices in responding to the pandemic and to deeper problems in the economy. She also repeatedly emphasized the need for “humility” in evaluating decisions that had been made in response to a wide range of possible risks.She did not directly answer questions about whether she agreed with previous chairs of the council who have argued that direct payments to lower-income Americans included in that legislation helped to inflame an inflation rate that hit a 40-year high last summer.But Dr. Rouse said the plan was an appropriate “insurance policy” in 2021 against the possibility of a double-dip recession. At the time, job growth had slowed and new waves of the coronavirus were colliding with a vaccine rollout that officials hoped would stabilize the economy but were unsure of.She also said that American workers were better off in their current situation — with low unemployment and strong job growth but higher-than-normal price growth — than they would have been if the economy had fallen back into recession and millions of people had been thrown out of work, potentially hurting their ability to find jobs in the future..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“I believe workers are better off today than they would have been had the federal government not intervened,” Dr. Rouse said. “But you know, some of this will depend on how long we have inflation with us. Because inflation is costly.” Asked when she expected it to return to more normal levels, she replied, “Hopefully by the end of the year.”Fiscal hawks have criticized Mr. Biden for signing a rescue plan that was not offset by spending cuts or tax increases and thus added to the national debt. Dr. Rouse said the plan “may well have” paid for itself in fiscal terms. She explained that possibility in terms of the debt the government incurred to finance the plan, offset by the consumer and business activity generated by the plan’s provisions that sent money to people, which increased gross domestic product.“If we hadn’t really provided that kind of support, G.D.P. would have been much smaller,” she said. “So the federal government might have spent less and so the debt might have been smaller, but G.D.P. might have been much smaller as well.”Previous administrations have claimed their policies will “pay for themselves” by spurring economic growth and higher tax revenues. Those include the tax cuts signed by President Donald J. Trump in 2017, which his administration said would pay for themselves, but which independent evidence showed added trillions to the national debt.Dr. Rouse repeatedly said in the interview that future researchers would have the final say on the impact of Mr. Biden’s policies — particularly on inflation. She and her staff were part of a modeling effort in early 2021 that concluded that even with Mr. Biden’s $1.9 trillion injection into the economy, there was little chance of prices rising so quickly that the Federal Reserve would not be able to control inflation.“I would say that we were all working under uncertainty,” she said on Thursday, when asked about those models. “I think time will tell as to whether that was the right move.”A labor economist at Princeton, Dr. Rouse pledged in the White House to advance Mr. Biden’s efforts to promote racial equity in the economy and American society. That included improving the data the federal government collects on economic outcomes by race and ethnicity.Asked about that work, Dr. Rouse pointed to new data from the Bureau of Labor Statistics that breaks out monthly job figures for Native Americans, along with a handful of other new efforts. “It’s a slow process,” she said.Mr. Biden praised Dr. Rouse and her role in helping to navigate the economic challenges of his administration in a statement issued by the White House on Friday. “No matter the challenge, Cecilia provided insightful analysis, assessed problems in a new way and insisted that we examine the accumulation of evidence in drawing conclusions,” he said. More

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    Global Economy May Be in a ‘Lost Decade,’ World Bank Warns

    Adding to crises like the pandemic, recent stress in the banking system is a new threat to world growth, experts at the organization said.WASHINGTON — The World Bank warned on Monday that the coronavirus pandemic and Russia’s war in Ukraine had contributed to a decline in the global economy’s long-term growth potential, leading to what could be a “lost decade” that would mean more poverty and fewer resources to combat the impact of climate change.The warning comes as the world deals with overlapping crises — a pandemic that crippled economies and strained public health systems and Russia’s invasion of Ukraine, which disrupted global supply chains and hurt international trade ties. The threat of a more protracted slump coincides with new signs of stress in the world’s financial system as a series of banking crises threaten to undermine economic growth.The World Bank projected in a new report that average potential global output is poised to fall to a 30-year low of 2.2 percent per year between 2023 and 2030. That would be a sharp decline from 3.5 percent per year during the first decade of this century.The falloff will be even more pronounced for developing economies, which grew at an average annual rate of 6 percent from 2000 to 2010; that rate could decline to 4 percent this decade.“A lost decade could be in the making for the global economy,” said Indermit Gill, the World Bank’s chief economist and senior vice president for development economics. “The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times — stubborn poverty, diverging incomes and climate change.”Officials at the World Bank said the “golden era” of development appeared to be coming to an end. They warned that policymakers would need to get more creative as they tried to address global challenges without being able to rely on the rapid economic expansions of countries such as China, which has long been an engine of worldwide growth.They suggested that international monetary and fiscal policy frameworks should be more closely aligned, and that world leaders needed to find ways to reduce trade costs and increase their labor force participation. A return to faster growth, they said, will not be easy.Kristalina Georgieva, the managing director of the International Monetary Fund, said on Sunday that “risks to financial stability have increased.”Jing Xu/Reuters“It will take a herculean collective policy effort to restore growth in the next decade to the average of the previous one,” the World Bank said in the report.The increasing frequency of global crises continues to weigh on output even as signs of an economic rebound emerge. Efforts by central banks to tame inflation by raising interest rates have fueled turmoil in the banking sector, leading to the failures of Silicon Valley Bank and Signature Bank in the United States this month and the rescue of Credit Suisse by UBS.Top economic officials have been watching to see if the strain on the banking system will become a significant economic headwind that could tip the United States into a recession.“It definitely brings us closer right now,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said of a recession on the CBS program “Face the Nation” on Sunday. “What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch.”Kristalina Georgieva, the managing director of the International Monetary Fund, said on Sunday that “risks to financial stability have increased” and that given high levels of uncertainty, policymakers must remain vigilant. She noted that the recent turmoil could have implications for the I.M.F.’s global economic outlook and financial stability report, which will be released in the next few weeks.“At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates — necessary to fight inflation — inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies,” Ms. Georgieva said at the China Development Forum.The I.M.F. said in January that it believed a global recession could be avoided as growth began to rebound later this year. At the time, it projected that output would be more resilient than previously anticipated, and it upgraded its growth projections for 2023 and 2024, but it did warn that “financial stability risks remain elevated.”World Bank officials said that if the current banking turmoil spiraled into a financial crisis and recession, then global growth projections might be even weaker because of the associated losses of jobs and investment.“However you look at it, if the current situation gets worse and turns into a recession, especially a recession at the global level, that could have negative implications for long-term growth prospects,” said Ayhan Kose, director the World Bank’s Prospects Group and the lead author of the report. More

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    The Furniture Hustlers of Silicon Valley

    As tech companies cut costs and move to remote work, their left-behind office furniture has become part of a booming trade.Brandi Susewitz touched the curved stitching on a pair of bright red Arne Jacobsen Egg Chairs and announced they were worth around $5,000 each. The chairs were in pristine condition, perched in the reception area of the software company Sitecore’s office in downtown San Francisco.Trisha Murcia, Sitecore’s workplace manager, said she was likely the only person who ever sat on them. “It’s really sad,” she said. “They opened this office in 2018 and then Covid happened.”Ms. Murcia led Ms. Susewitz around Sitecore’s office, pointing out bar stools that had never been used, 90-inch flat screens, shiny conference room tables and accent chairs from the retailer Blu Dot. The whiteboard walls, outfitted with markers and erasers, were spotless. And rows upon rows of 30-by-60 inch, height-adjustable Knoll desks with Herman Miller Aeron chairs sat collecting dust.Ms. Susewitz measured and snapped photos, identifying designer brands and models. Her office furniture resale business, Reseat, would take all of it, she declared. “We can find a home for this,” she said. “We have time.”Brandi Susewitz looked at two red Arne Jacobsen Egg Chairs during a visit to the Sitecore office in San Francisco last month.Jason Henry for The New York TimesSitecore was reducing its office space because the pandemic meant more employees worked remotely.Jason Henry for The New York TimesMs. Susewitz, who started Reseat in 2020, is one of an increasing number of behind-the-scenes specialists in the Bay Area who are carving out a piece of the great office furniture reshuffling. There are professional liquidators, Craigslist flippers and start-ups spouting buzzwords like “circular economy.” And a few guys with warehouses full of really nice chairs.All of them are capitalizing on a wave of tech companies that are drastically shrinking their physical footprints in the wake of the pandemic-induced shift to remote work and the recent economic slowdown.Nowhere is the furniture glut stronger than in San Francisco. Tech workers have been slowest to return to the office in the city, where commercial vacancy rates jumped to 28 percent last year, up from 4 percent in 2019, according to the real estate firm CBRE. Occupancy in San Francisco in late January was 4 percent below the average of the top 10 U.S. cities, according to the building security firm Kastle. And companies of all sizes, including PayPal, Block and Yelp, are giving up their expensive downtown headquarters or downsizing their office space.Add to that the tech industry’s recent U-turn from optimistic hypergrowth to fear and penny pinching. That has led tech giants such as Google and Salesforce, along with smaller companies like DoorDash and Wish, to carry out widespread layoffs, cutting more than 88,000 workers in the Bay Area over the last year, according to Layoffs.fyi.Some start-ups have abruptly gone under, including the flying car company Kittyhawk, the autonomous vehicle start-up Argo AI and the interior design start-up Modsy. Others have slashed spending, starting with their dusty, rarely-used offices full of designer furniture.Ms. Susewitz checked out an Aeron chair during her visit to Sitecore. She toured the office with Trisha Murcia, Sitecore’s workplace managerJason Henry for The New York TimesMs. Susewitz measured office furniture at Sitecore’s office in downtown San Francisco.Jason Henry for The New York TimesLast month, Twitter held a public auction for some of its furniture, hawking dry erase boards, conference tables and a three-foot blue statue of its bird logo. The social media company, which is owned by Elon Musk, at one point stopped paying the rent on some of its office leases.Layoffs in Big TechAfter a pandemic hiring spree, several tech companies are now pulling back.A Growing List: Alphabet, Microsoft and Zoom are among the latest tech giants to cut jobs amid concerns about an economic slowdown.Salesforce: The company said it would lay off 10 percent of its staff, a decision that seemed to go against the professed commitment of its co-founder and chief executive, Marc Benioff, to its workers.New Parents Hit Hard: At tech companies that spent recent years expanding paid parental leave, parents have felt the whiplash of mass layoffs in an especially visceral way.Tech’s Generational Divide: The recent cuts have been eye-opening to young workers. But to older employees who experienced the dot-com bust, it has hardly been a shock.Martin Pichinson, a founder of Sherwood Partners, an advisory firm that helps restructure failing start-ups, said he was staffing up to handle increased demand. Today’s reckoning was not as severe as that of the dot-com bust in the early 2000s when dozens of tech companies collapsed, he said, but “everyone is acting as if businesses are falling apart.”That’s led to a lot of expendable furniture, much of it hewing to a specific youthful aesthetic of Instagrammable bright colors and midcentury modern shapes. That look, complemented by plant walls of succulents and kombucha on tap, was a hallmark of the tech talent wars over the past two decades, telegraphing a company’s success and sophistication.Then there’s the Aeron chairs. The $1,805 black roller-wheel desk chairs are a closely-watched barometer of tech excesses. Their sleek design makes them a work of art, according to the Museum of Modern Art. And in the tech industry, where workers are used to being pampered while chained to their desks, they are ubiquitous.When internet companies imploded in 2000, liquidators filled their warehouses with the “dot-com thrones.” Now any whiff of empty Aerons piling up conjures memories of that slump and sets off fears that another is imminent.The Bay Area’s Craigslist currently has gobs of the chairs for sale, photographed in warehouses, lined up in corners of conference rooms and wrapped in plastic outside a storage unit. Some are selling for as cheap as a few hundred bucks.The listings are a reminder: Silicon Valley is a place of booms and busts, with enterprising hustlers who see nothing but opportunity, even in the rubble.Mr. Norbu’s furniture reselling business, called Enliven, has expanded to include a van, three employees and a warehouse.Jason Henry for The New York TimesA trail of Dropbox furnitureFor furniture specialists, it all starts with supplies from tech companies like Dropbox.In 2019, the file storage company moved into its 735,000-square-foot headquarters in San Francisco. Its 15-year lease was the largest in the city’s history at the time. Dropbox’s old office was rented to other companies, and last year, a cache of furniture — futuristic-chic chairs, couches and tables — from that office made its way to a liquidator.The inventory included several emerald green velvet Jean Royère-style Polar Bear chairs that cost roughly $10,000 to custom make in 2016, according to their maker, Classic Design LA.Three of those chairs sold to Tenzin Norbu, a furniture reseller in Richmond, Calif., who paid around $1,000 for each. Mr. Norbu, 25, started buying and selling high-end furniture on online marketplaces early in the pandemic, when people were eager to redecorate the homes they were stuck inside and stymied by supply chain delays on furniture.Since then, his business, called Enliven, has expanded to include a van, three employees, a 4,000-square-foot warehouse and annual revenue in the mid-six figures.The tech talent wars, with companies competing to out-perk one another with the fanciest offices, were good for designer furniture. The retreat from that battle has been just as good for resellers.Last year, Mr. Norbu scored some lounge chairs and couches from Fast, a payments start-up that collapsed in the spring. He also paid “tens of thousands” of dollars, he said, to fill a 20-foot truck of still-in-the-box furniture that WeWork, whose valuation had plummeted, had kept in storage since 2019. The trove included dining chairs, lamps, couches and a chunky red Bollo armchair by the Swedish designer Fogia.Mr. Norbu’s inventory included three green Polar Bear chairs that were custom made for Dropbox.Jason Henry for The New York TimesMr. Norbu said he planned to buy furniture from more tech start-ups as his business grows.Jason Henry for The New York TimesOn a recent tour of his warehouse, Mr. Norbu pointed out a pair of never-used felt poufs from a start-up, two glass coffee tables from Delta Air Lines, some gray lounge chairs that were “probably from Google” and plants from a venture capital firm.Mr. Norbu aims to target more tech start-ups as his business expands. The companies are always acquiring or shedding furniture, since they tend to grow quickly and shut down abruptly. Many of his buyers also work in tech, he said, which means they could find themselves eating dinner at the very conference table they once gathered around for meetings.Last year, Mr. Norbu sold one of the Polar Bear chairs that had been owned by Dropbox to a fellow furniture flipper, Nate Morgan, for $1,400. Mr. Morgan started trading furniture in the fall after he was laid off from a business development job at Meta, which owns Facebook and Instagram. He said he quickly discovered the Bay Area contains “crazy pockets of massive amounts of furniture.”Mr. Morgan’s business, Reclamation, recently worked with a wealthy tech entrepreneur who had bought a second San Francisco home to live in while his main home was being renovated. The entrepreneur furnished the 4,000-square-foot second home with new goods from Restoration Hardware. Nine months later, when the entrepreneur moved into his main home, Mr. Morgan bought all of the second home’s furniture for 10 percent of its retail price.Mr. Morgan, 44, said the furniture business was a welcome shift from the 15 years he spent working in tech. “It feels really good to be building a local community business that’s tied to this geographic area,” he said.Outside Mr. Norbu’s 4,000-square-foot furniture warehouse.Jason Henry for The New York TimesMr. Morgan later sold the Polar Bear chair that had been at Dropbox for a profit to an interior designer in Los Angeles, who then sold it to a client in the Hollywood Hills. From the liquidator, to Mr. Norbu, to Mr. Morgan, to the interior designer, each person in the chain made a little money.Dropbox declined to comment. During the pandemic, the company shifted to remote work and made plans to sublet 80 percent of its headquarters. Takers have been slow; the company recently lowered its expected rate, pushed out its target for finding tenants by two years and recorded a $175 million charge on its real estate holdings in 2022.Dropbox’s remaining space has been converted into what the company calls a “studio” instead of an “office,” designed for meetings and “touchdown spots,” or cafes and libraries for people to sit, chat and work briefly. There are no more desks.‘It was a ghost town’Ms. Susewitz, 49, has worked in office furniture since 1997, when she became a customer service representative at Lindsay-Ferrari, a Bay Area furniture dealer now known as One Workplace.The furniture industry’s wastefulness always bugged her, she said, with companies discarding durable, commercial-grade items that were built to last decades every time they moved. Companies waited until the last minute to deal with the furniture, she said, increasing the odds it wound up in the trash.In the late 1990s dot-com boom, Ms. Susewitz created a business plan to build an online marketplace for used office furniture. She abandoned it when eBay took off, thinking the company would eventually solve the problem. “But that never happened,” she said.Over the next two decades, she worked in sales and business development, outfitting Bay Area businesses with goods from “the big five” of workplace furniture — Steelcase, MillerKnoll, Haworth, Allsteel and Teknion.Before the pandemic, Sitecore was expanding its space so rapidly that it had leased another half of a floor in its office tower.Jason Henry for The New York TimesWhen the pandemic hit, Ms. Susewitz’s livelihood of new office furniture screeched to a halt. She watched with disgust as companies tossed out barely-used desks and chairs.“Perfectly good, brand-new furniture is just being carted off to landfills,” she said. So she created Reseat to help businesses liquidate furniture. The company uses an inventory management system that tracks the items’ “life cycles” so it can quickly share the specifications for the furniture, making the goods easier to sell. Given enough time, sellers can expect 20 cents on the dollar for their furniture, she said. Reseat, which has 14 employees, has worked with more than 100 companies and sold more than eight million pounds of furniture.“Our goal is to sell it standing,” Ms. Susewitz said. “Once it ends up in a warehouse, it loses value and ends up collecting dust.”In December, Reseat was hired to liquidate more than 900 work stations, 96 office chairs, 40 work benches, 24 sofas and 84 file cabinets at an office in Santa Clara, Calif. Analog Devices, the semiconductor company that had moved out, hardly used the space during the pandemic. But Pure Storage, the data storage company moving in, didn’t want those pieces. Reseat had just four weeks to sell the items.“It just ate me up inside,” Ms. Susewitz said. That she found buyers in time was “a miracle,” she added.Pure Storage said it was reusing a “substantial” amount of Analog Devices’s furniture, including desk chairs and conference room items, but it planned to install its existing desks “to better suit how Pure employees work in a more open office environment.” An Analog Devices representative declined to comment.Ms. Susewitz was excited about the furniture at Sitecore because the company had contacted Reseat months ahead of its move, setting it up to easily find a home for its goods. At Sitecore’s office, she showed off how to identify the size of an Aeron chair. Each one has a set of plastic bumps hidden on its back. Two bumps indicate the most common size, a “B.”There were 16 size Bs around a wooden conference table that Sitecore had built using wood from a houseboat that was in Sausalito, Calif. In the center, a basin filled with Legos was flanked by the universal emblems of the pandemic: a bottle of Purell and a package of Clorox wipes.Ms. Susewitz said she would take everything from Sitecore’s kitchen area, except for the plates and silverware.Jason Henry for The New York TimesBefore the pandemic, Sitecore was expanding its space so rapidly that it had leased another half of a floor in its office tower. But “once the pandemic hit, it was a ghost town,” said Brad Hamilton, the company’s head of real estate and facilities.Sitecore plans to downgrade to 30 desks from 170. “We’re paying an outrageous amount of money for a floor that nobody uses,” he said.Toward the end of the office tour, Ms. Susewitz surveyed Sitecore’s empty kitchen area, outfitted with a Ping-Pong table, a Ms. Pac-Man machine and two curved, six-foot privacy coves. Ms. Susewitz said she would take everything, except for the plates and silverware.Chair influencersOne result of the furniture trading is a lot more people logging into Zoom meetings from very nice chairs — and not only in the Bay Area.In January, Gilad Rom, a software engineer in Los Angeles, decided to upgrade his work station at home. He searched Craigslist and found a seller with 500 Aeron chairs — apparently acquired from a SiriusXM office that had shifted to remote work — in Culver City, Calif.When he posted a picture of the chairs gathered in a room, their black foam arms intertwined, the reaction was explosive. Some people wanted to score their own cheap Aeron. Many more wanted to reminisce about what the empty chairs represented — corporate excess gone awry.“I think it brought back a lot of memories,” Mr. Rom, 43, said. “Flashbacks from 2008 and 2000.”The seller, a secondhand furniture shop called Wannasofa, was so overwhelmed with calls after Mr. Rom’s tweet that the store gave him a 25 percent discount. “Apparently I’m a chair influencer now,” he said.The reaction also gave him an idea.“Maybe I should build an app that helps people find cheap luxury furniture,” he said. “Maybe there’s something there.” More

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    Egg Shortages Are Driving Demand for Raise-at-Home Chickens

    Which shortage came first: the chicks or the eggs?Spooked by a huge spike in egg prices, some consumers are taking steps to secure their own future supply. Demand for chicks that will grow into egg-laying chickens — which jumped at the onset of the global pandemic in 2020 — is rapid again as the 2023 selling season starts, leaving hatcheries scrambling to keep up.“Everybody wants the heavy layers,” said Ginger Stevenson, director of marketing at Murray McMurray Hatchery in Iowa. Her company has been running short on some breeds of especially prolific egg producers, partly as families try to hedge their bets against skyrocketing prices and constrained egg availability.“When we sell out, it’s not like: Well, we can make another chicken,” she said.McMurray’s experience is not unique. Hatcheries from around the country are reporting that demand is surprisingly robust this year. Many attribute the spike to high grocery prices, and particularly to rapid inflation for eggs, which in December cost 59.9 percent more than a year earlier.“We’re already sold out on a lot of breeds — most breeds — until the summer,” said Meghan Howard, who runs sales and marketing for Meyer Hatchery in northeast Ohio. “It’s those egg prices. People are really concerned about food security.”Google search interest in “raising chickens” has jumped markedly from a year ago. The shift is part of a broader phenomenon: A small but rapidly growing slice of the American population has become interested in growing and raising food at home, a trend that was nascent before the pandemic and that has been invigorated by the shortages it spurred.“As there are more and more shortages, it’s driving more people to want to raise their own food,” Ms. Stevenson observed on a January afternoon, as 242 callers to the hatchery sat on hold, presumably waiting to stock up on their own chicks and chick-adjacent accessories.The Cackle Hatchery received eggs from local farms in Missouri. Hatcheries could theoretically hatch more chicks to meet the surge in demand, but is difficult in today’s economy.Neeta Satam for The New York TimesRaising chickens for eggs takes time and upfront investment. Brown-egg-layer chicks at McMurray’s cost roughly $4 a piece, and coops can cost hundreds or thousands of dollars to construct.Mandy Croft, a 39-year-old from Macon, Ga., serves as administrator on a Facebook group for new chicken farmers and is such an enthusiastic hobbyist that family members call her the “poultry princess.” Even she warned that raising chickens may not save dabblers money, but she said her group was seeing huge traffic nonetheless.“We get hundreds of requests a day for new members, and that’s due to the rising egg cost,” she said.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Falling Used-Car Demand Puts Pressure on Carvana and Other Dealers

    Dealerships are seeing sales and prices drop as consumers tighten their belts, putting financial pressure on companies like Carvana that grew fast in recent years.About a year ago, the used-car business was a rollicking party. The coronavirus pandemic and a global semiconductor shortage forced automakers to stop or slow production of new cars and trucks, pushing consumers to used-car lots. Prices for pre-owned vehicles surged.Now, the used-car business is suffering a brutal hangover. Americans, especially people on tight budgets, are buying fewer cars as interest rates rise and fears of a recession grow. And improved auto production has eased the shortage of new vehicles.As a result, sales and prices of used cars are falling and the auto dealers that specialize in them are hurting.“After a huge run up in 2021, last year was a reality check,” Chris Frey, senior manager of economic and industry insights at Cox Automotive, a market research firm. “The used market now faces a challenging year as demand weakens.”According to Cox, used-car values fell 14 percent in 2022 and are expected to fall more than 4 percent this year. That shift means many dealers may have no choice but to sell some vehicles for less than they paid.The industry’s difficulties have been exemplified by Carvana, which sells cars online and became famous for building “vending machine” towers where cars can be picked up. The company recently reported a quarterly loss of more than $500 million, and has laid off 4,000 employees.In the last 12 months, Carvana piled up debt. Its stock price has fallen by more than 95 percent in the last 12 months, and three states temporarily suspended its operating license after consumer complaints.“We think there’s a decent chance the company will end up having to file for bankruptcy protection,” said Seth Basham, an Wedbush analyst. “They have too much debt for the level of sales and profitability and can’t support that debt load, and likely will need to restructure.”In a statement to The New York Times, Carvana said it was confident it had “sufficient” funds to turn its business around, noting the company had $2 billion in cash and an additional $2 billion in “other liquidity resources” at the end of the third quarter.It has also hired the investment bank Moelis & Company and is working to reduce its inventory of vehicles and cut the cost of reconditioning them.Used-car values fell 14 percent in 2022. Some dealers may have no choice but to sell some vehicles for less than they paid.An Rong Xu for The New York Times“Millions of satisfied customers have responded positively to Carvana’s e-commerce model for buying and selling cars,” the company said. “Although the current environment and market has drawn attention to the near term, we continued to gain market share in the third quarter of 2022, and we remain focused on our plan to drive to profitability.”CarMax, another used-car giant, is also hurting, although it is on much steadier ground. In the three months that ended in November, its vehicle sales fell 21 percent to 180,000, and net income tumbled 86 percent, to $37.6 million.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    U.S. Economy Grew at 2.9% Annual Rate in Fourth Quarter

    The continued growth in the fourth quarter showed the resilience of consumers and businesses in the face of rising inflation and interest rates.The economy remained resilient last year in the face of inflation, war and a Federal Reserve intent on curbing the pace of growth.A repeat performance in 2023 is far from guaranteed.U.S. gross domestic product, when adjusted for inflation, increased at an annual rate of 2.9 percent in the fourth quarter of 2022, the Commerce Department said on Thursday. That was down from 3.2 percent in the third quarter, but nonetheless a solid end to a topsy-turvy year in which the economy contracted in the first six months, prompting talk of a recession, only to rebound in the second half.Beneath the quarterly ups and downs is a simpler story, economists said: The recovery from the pandemic recession has slowed from the frenetic pace of 2021, but it has retained momentum thanks to a red-hot job market and trillions of dollars in pent-up savings that allowed Americans to weather rapidly rising prices. Over the year as a whole, as measured from the fourth quarter a year earlier, G.D.P. grew 1 percent, down sharply from 5.7 percent growth in 2021.“2020 was the pandemic; 2021 was the bounce-back from the pandemic; 2022 was a transition year,” said Jay Bryson, chief economist for Wells Fargo.The question is, a transition to what? Mr. Bryson, like many economists, expects a recession to begin sometime this year, as the effects of higher interest rates ripple through the economy.The initial rebound from the pandemic recession was much stronger in the United States than it was in much of the rest of the world. The gap widened last year as the war in Ukraine threatened to push Europe into a recession and the strict Covid suppression policies in China constrained growth there.But the U.S. economy faces fresh challenges in 2023. Inflation remains too high by many measures, and the Fed is expected to continue increasing rates in an effort to bring prices under control. A congressional showdown over raising the debt ceiling could cause further turmoil in financial markets — or a crisis if lawmakers fail to reach a deal.Inflation F.A.Q.Card 1 of 5What is inflation? More