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    This Is What It Looks Like to Try to Count America’s Homeless Population

    To fix a problem, you need to know its scope. To do that, you need sheriffs, social workers, volunteers, flashlights and 10 days in January.They go into the streets in search of data. Peeking behind dumpsters, shining flashlights under bridges, rustling a frosted tent to see if anyone was inside. This is what it takes to count the people in America who don’t have a place to live. To get a number, however flawed, that describes the scope of a deeply entrenched problem and the country’s progress toward fixing it.Last year, the Biden administration laid out a goal to reduce homelessness by 25 percent by 2025. The problem increasingly animates local politics, with ambitious programs to build affordable housing getting opposition from homeowners who say they want encampments gone but for the solution to be far from their communities. Across the country, homelessness is a subject in which declarations of urgency outweigh measurable progress.Officially called the Point-in-Time Count, the annual tally of those who live outside or in homeless shelters takes place in every corner of the country through the last 10 days of January, and over the past dozen years has found 550,000 to 650,000 people experiencing homelessness. The endeavor is far from perfect, advocates note, since it captures no more than a few days and is almost certainly a significant undercount. But it’s a snapshot from which resources flow, and creates a shared understanding of a common problem.This year, reporters and photographers from The New York Times shadowed the count, using a sampling of four very different communities — warm and cold, big and small, rural and urban — to examine the same problem in vastly different places.Volunteers and employees of the Downtown Women’s Center prepare to count people who are unhoused, in the Skid Row neighborhood of Los Angeles.Mark Abramson for The New York TimesOn any given evening, the forces that drive someone to sleep outside or in a shelter are myriad and complex. A long-run erosion in wages. A fraying social safety net. The fact that hard drugs are cheap and mental health care is not. Year after year, the count finds people experiencing homelessness to be disproportionately Black, disproportionately old and disproportionately sick. Members of the L.G.B.T.Q. community are overrepresented as well.There is one factor — the high cost of housing and difficulty of finding anything affordable — that rises above the rest. The numbers bear this out, explaining why expensive West Coast cities like Los Angeles have long had the nation’s worst homeless problems, why growing cities like Phoenix are now seeing a troubling rise, and why it is seemingly easier to solve homelessness in places like Rockford, Ill., a once-thriving factory town that has lost a lot jobs but where housing remains cheap.“Housing has become a competition for a scarce resource, and when you have that the people who are most vulnerable are going to lose,” Gregg Colburn, a professor at the University of Washington and a co-author of “Homelessness Is a Housing Problem,” said in an interview.The 2023 count will provide a crucial understanding of the legacy of the Covid-19 pandemic and the success of government efforts in blunting its effects. Last year’s count showed homelessness was essentially flat from two years ago, a fact that Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness, attributed to widespread eviction moratoriums, billions in rental assistance and an expansion of federal housing vouchers that fortified the safety net. The question for this year, Mr. Olivet said, is “whether we were able to flatten the curve and even start pointing downwards.”Behind each number are tens of thousands of volunteers, outreach workers and public safety officers who spend the wee hours looking for the most destitute members of their community.Sometimes, people gladly answer questions and thank volunteers for what they are doing, with a hope that accurate figures will bring more funding for housing and services. Other times, they feel violated and gawked at.“What are you doing?” a man on a bicycle in Los Angeles asked a team of volunteers in day glow vests as they walked past a downtown sidewalk covered in tents.“Counting.”“Counting what?”“Counting people.”— Conor DoughertyLos Angeles, Jan. 25-26‘Once you enter this whole cycle, you are always on the edge’On the last night of the count, volunteers, along with those working for the Downtown Women’s Center, walk around the Skid Row neighborhood of downtown Los Angeles to count people who are unhoused.In the capital of the capital of homelessness, the people who live outside are used to seeing outsiders. This is especially true in Skid Row, a 50-block neighborhood in downtown where some 3,000 people live in the tents, shanties and recreational vehicles that so thoroughly clog the sidewalks that much of the pedestrian traffic is in the streets. So when dozens of volunteers in reflective vests left the Downtown Women’s Center to count on a recent evening, the people they were counting rarely so much as looked up.“They constantly have visitors, whether it’s proselytizers, outreach teams, people offering them something to eat, people offering them drugs — people doing a homeless count,” said Suzette Shaw, a volunteer who helped with the tally this year. “This community never sleeps.”Ms. Shaw is a 58-year-old student who lives in the neighborhood and was once homeless herself. She lived in various forms of transitional housing — hotels, shelters — until she found a permanent subsidized unit in 2016, whose rent is partially covered with a Section 8 housing voucher. Joining the count is one way she tries to make sense of a neighborhood whose scenes of ragged fabric and open fires are some of the bleakest pictures America has to offer.Volunteers counting people who are unhoused near Skid Row in Los Angeles.Members of the Los Angeles Homeless Services Authority counted people who are unhoused at an encampment near the Los Angeles River.Given that it has nation’s worst homeless problem, Los Angeles’s count requires assembling a small army that spends three days and several thousand hours amassing their figures. This ranges from volunteers like Ms. Shaw who comb sidewalks for a few hours, to officers like Lt. William Kitchin, of the Los Angeles County Sheriff’s Department, who along with a team of deputies and outreach workers spent a recent Wednesday driving a stretch of the Los Angeles River to tally the residents who live under overpasses and along the banks.More on CaliforniaIn the Wake of Tragedy: California is reeling after back-to-back mass shootings in Monterey Park and Half Moon Bay.Fast-Food Industry: A law creating a council with the authority to set wages and improve the conditions of fast-food workers was halted after business groups submitted enough signatures to place the issue before voters next year.Medical Misinformation: A federal judge has temporarily blocked enforcement of a new law allowing regulators to punish doctors for spreading false or misleading information about Covid-19.Oil From the Amazon: If you live in California, you may have a closer connection to oil drilling in the Amazon rainforest than you think.Unlike smaller cities, which often pair the Point-in-Time Count with interviews and outreach, for sensitivity and safety reasons organizers in Los Angeles discourage volunteers from interacting with the people on the streets.Some walk, some drive, but for the most part it happens briskly and the numbers they come back with are large. According to last year’s count, about 20 percent of the entire nation’s unsheltered population — about 50,000 people — lived in Los Angeles County.This has left voters despondent: Surveys consistently show housing and homelessness are the biggest concern of California voters, while a recent poll by the Los Angeles Business Council Institute found residents are furious at the city’s inability to make so much as a dent, with many voters saying they feel unsafe and have considered moving because of the homeless problem.Deputies from the Los Angeles Sheriff’s Department talk with Reyna Paula, who has built a temporary home, in which she has been living for five years, under a bridge along Coyote Creek.Mark Abramson for The New York TimesSeveral deputies accompanied workers from the Los Angeles Homeless Services Authority as they counted people who are unhoused staying along the riverbed and under bridges in Los Angeles.After a campaign last year that focused almost entirely on homelessness, Karen Bass, the city’s new mayor, declared a state of emergency on her first day in office. This gives her office expanded powers to speed the construction of affordable housing by lifting rules that impede it. “Tonight we’re counting the people on the street, but we also know that it is most important that we prevent new people from falling into homelessness,” the mayor said to a crowd at a kickoff event in the San Fernando Valley. She joined the count shortly after, along with the actor Danny Trejo.Ms. Bass summed up the central problem for Los Angeles and other high-cost U.S. cities: Even as they spend billions on new housing and expanded services, more people continue to fall into homelessness faster than these programs can help people already on the streets. Nationally, some 901,000 people exited homelessness each year between 2017 and 2020 on average. That figure would be a huge accomplishment, but for one detail: About 909,000 people entered homelessness each year over the same period.“Once you enter this whole cycle, you are always on the edge,” Ms. Shaw said.Phoenix, Jan. 25‘I stayed there till they kicked me out’​​Advocates say Phoenix’s streets are increasingly filled with people who simply could not afford an increasingly pricey Arizona.Daniel Greene never thought he would end up homeless in Phoenix, a city that enticed him from Idaho a decade ago with balmy winters and cheap housing. But when his lease was up for renewal in December, Mr. Greene said his landlord raised the monthly rent on his one-bedroom apartment to $1,400 from $700. Arizona has few restrictions on rent increases. Now, Mr. Greene is sleeping in a park while he tries to scrape together a deposit.“I would need $4,000,” he said on Tuesday morning, as a volunteer counted Mr. Greene as part of the city’s portion of the annual Point-in-Time Count.Mr. Greene, 54, is one of thousands of newly homeless people who have been coughed out of the tailpipe of Arizona’s economic engine, casualties of growth that has drawn new factories and hundreds of thousands of new residents, while sending housing costs spiraling.Advocates say Phoenix’s streets are increasingly filled with people who simply could not afford an increasingly pricey Arizona: Average rent in the Phoenix area has risen by about 70 percent over the past five years, and the number of people in shelters or living on the street has gone up by 60 percent.“The cost of housing is the biggest thing we see,” said Kenn Weise, the mayor of the suburban city Avondale, Ariz., and chairman of the Maricopa Association of Governments, which runs the Point-in-Time Count.The path that brought Mr. Greene to a park in downtown Phoenix, repairing a beater bicycle, began, he said, when he fell from a scaffold at his carpentry job a few years ago. Work was impossible after he crushed his leg, but he said he survived on monthly disability checks.The rent on his apartment near the palms of Encanto Park crept up from $525 to $700 before doubling in December, part of the disappearance of modestly priced rentals around Phoenix. A decade ago, almost 90 percent of apartments around Phoenix rented for $1,000 or less. Now, just 10 percent do.“I stayed there till they kicked me out,” Mr. Greene said.Gustavo Martinez, who is unhoused in Phoenix. He lost his job during the pandemic, he said, and feels safer sleeping outside than in a shelter.The Point-in-Time Count is part census, part deeply intimate personal history. Volunteers here ask for people’s name, age and ethnicity, but also whether prison time, drug use or mental illness is a factor in their homelessness. He shoved his furniture and most of his clothes into a $100 monthly storage unit and decided to live outside to try to rebuild his finances. A weekly motel might have been safer, but he figured the open air was free. He is camping out with three other men and spends a lot of time scouring roommate websites.“I’m doing this on my own,” he said.As the first of nearly 1,000 volunteers crisscrossed downtown Phoenix starting before sunrise on Tuesday morning, they met people sleeping in makeshift tents beside new art spaces and camping out in the shadow of construction cranes.One volunteer, Katie Gentry, regional homelessness program manager for the Maricopa Association of Governments, walked up to a gas station downtown where people had come to ask for quarters to buy coffee and escape from the chill; she approached them to ask a litany of deeply personal questions with a matter-of-fact cheerfulness.Daniel Pawlak and Rochelle Putnam have been living in an encampment known as “The Zone.”Alisha Coleman bikes away after being questioned during a Point-in-Time Count.The Point-in-Time Count is part census, part deeply intimate personal history. Volunteers here ask for people’s name, age and ethnicity, but also whether prison time, drug use or mental illness is a factor in their homelessness. One question asks whether people had ever traded sex for shelter.Gustavo Martinez, 56, said he lost his job as a concessionaire for spring-training baseball games during the early days of the pandemic, and he lost his subleased apartment a few months later. He has been bouncing from friends’ couches to shelter beds to living on the streets ever since. He said that he earned a little money cleaning up after the downtown Phoenix farmers market, and that he often spent his time marveling at how anyone could afford to live downtown in the new high-rises sprouting up around him.“Everything is just going up and up and up.”Cleveland, Mississippi, Jan. 25-27‘They were born there, raised there, and they have become homeless there’Kerria Whitley, an intern at the Bolivar Community Action Agency, takes photographs of a vacant home that has been occupied by unhoused folks for documentation.One of Florida McKay’s colleagues had passed on a tip: There was a woman living in a trailer without heat, light or water in Shelby, Miss., a little hamlet surrounded by the soybean and cotton fields north of town. On a cold and gray morning, Ms. McKay and Robert Lukes, who was helping to administer the Point-in-Time Count in the Mississippi Delta, drove past acres of mud-bogged farmland to find her.“The Delta’s a little different from other areas in terms of homelessness,” said Ms. McKay, the director of homeless services for the Bolivar County Community Action Agency, a nonprofit organization. There are plenty of people in need here — the median household income in Bolivar County is less than half of the nation’s and the poverty rate is roughly triple — but they are scattered across the region, making the Point-in-Time Count a sprawling exercise in detective work.On a street corner in Shelby, they parked near a blue and white trailer sagging into the grass. A woman opened the tattered door, hugging herself in the cold, and welcomed Ms. McKay and Mr. Lukes inside. Blankets were stapled over the windows and a rusty propane tank squatted at the end of a bed.Mr. Lukes began the questionnaire: name, age, how long had she been homeless. Vickey Wells, she said, born on Christmas Day, 1971. She had been living in this dark, cold room for most of a year. Asked how long she had been in the community, Ms. Wells seemed puzzled. She grew up down the street. “This is my home,” she said.“The Delta’s a little different from other areas in terms of homelessness,” said Florida McKay, the director of homeless services for the Bolivar County Community Action Agency, a nonprofit organization.Robert Lukes, center, and Ms. McKay with Vickey Wells inside a trailer she has been living for a year without gas, electricity and water.Rural areas are different in terms of homelessness and the Delta is perhaps more different still. In this vast expanse of rural Mississippi, one of the poorest regions of the country, there are very few shelters, very few multifamily housing developments and, relative to the rest of the country, fewer places for rent.It is a landscape of cropland and modest stand-alone homes, where families have lived — or did live — for generations. Some homes have been empty for years, left behind by a Great Migration of Black people out of the Delta that began early last century and has never really stopped. In contrast to big cities, where those who are homeless are often people who have moved there in search of opportunities, many of the people without a place to stay in the Delta are those who have never left. In some cases they seek shelter in the homes left by those who went elsewhere.“People in the Delta that are homeless are from the Delta,” said Hannah Maharrey, the director of the Mississippi Balance of State Continuum of Care, a federally funded program to address homelessness. It’s also the organization that Mr. Lukes works for. “They are literally homeless in their hometown. They lived there, they’re from there, their roots are there, they were born there, raised there, and they have become homeless there.”Some have been kicked out by family or marooned after the death of a parent; some are escaping abuse; some have fallen prey to addiction in a place where the margin for error is virtually nonexistent. Some never left their homes at all, staying as the structures around them decayed and utilities were cut off, becoming homeless without ever moving. The Point-in-Time Count relies on these local ranks and their network of sources — court clerks, gas station attendants, motel owners, police officers, longtime contacts within the homeless community itself. Kimberly Martin, 33, of Eudora, Ark., in a vehicle that she and her partner, Jason Matlock, have been living in for six months, in Greenville, Miss.Jobs in the Delta are scarce, government services are limited and the nonprofit infrastructure is thin, Ms. Maharrey said. The burden of helping the desperate falls largely to churches, neighbors and community groups.The Point-in-Time Count relies on these local ranks and their network of sources — court clerks, gas station attendants, motel owners, police officers, longtime contacts within the homeless community itself. On cold nights, those seeking shelter find sanctuary anywhere they can, in cars, abandoned homes and vacant strip malls. The only way to really know who is staying where is to live in these communities and know the people firsthand.The fact that the rural homeless population is harder to see is what makes the yearly census so important, Ms. Maharrey said. “When I talk to other communities, they find it difficult to believe that there’s homelessness in rural Mississippi, or that there’s homelessness in rural America,” she said. “The Point-in-Time Count gives us a reference point.”In Greenwood, Miss., population around 14,000, the team drove into a wooded lot where Donjua Parris, 43, had been living with her partner since the summer. Four years ago, her partner lost his maintenance job at the apartment building where they lived, she said, and when they were evicted, her family wouldn’t take them in. Ms. Lukes ran through the census questions with Ms. Parris, who shivered in the cold, then he asked her where they should go to find others.“There is a place,” she said, gesturing toward an area on the riverside of a nearby levee, where she said a pregnant woman was living. “She needs help.”A few minutes later, Mr. Lukes had climbed down the levee and found a campsite abandoned. If the woman had been there, she was gone now.Rockford, Illinois.‘Right now, I don’t got to worry anymore’Kathleen Combs speaks to a person seeking shelter for the night at a warming center at Second First Church in Rockford, Ill.Jamie Kelter Davis for The New York TimesEmpty bridges, empty alleys, an empty shanty behind a strip mall parking lot. Angie Walker ticked off a list of where people have been known to sleep. Outside, it was in the mid-20s with a light layer of snow upholstered on fences and grass.“Our hope is that nobody is outside,” said Ms. Walker, who oversees the homeless program for Rockford’s Health and Human Services Department. “We don’t usually get that lucky.”They did not, but they were close. After a three-hour search in a Chevy Suburban that at times went off-road and on bike paths, Ms. Walker and her team, which included a retired police officer and a member of the Fire Department, found only one person — a shivering man in a tent who clasped his hands as she ran through a list of survey questions — on the night of Rockford’s count.As Ms. Walker had predicted earlier in the evening, most of the night’s numbers consisted of the three-dozen people who laid on rectangles of padding parceled across a gym floor at Second First Church. On winter nights, the church becomes a warming center, providing a captive audience for Ms. Walker and the dozen others who spent an hour counting bodies and performing surveys after the drive.Not having to worry anymore: That is the goal of the tens of billions that city, state and federal governments spend each year in their so far futile effort to end homelessness.“Right now, I don’t got to worry anymore,” said Shirley Gill, 63, who was in for the evening.Douglas Webb, 54, a Marine Corps veteran, was unhoused and used to sleep in the warming center at Second First. Now he works at the center in the winter.Rockford is one of the country’s biggest success stories, having effectively ended the condition for veterans and chronically homeless individuals, or those who have experienced homelessness for at least a year, who have severe addiction problems or live with a disability of some kind.The road to those accomplishments was a program called “Built for Zero,” a coalition of 105 local governments nationwide whose members commit to reorganizing their social services and gathering monthly data with a goal of drastically reducing their homeless population. (In 2021, Community Solutions, the New York nonprofit that created “Built for Zero,” was awarded a $100 million grant from the MacArthur Foundation to expand the program.)Central to the work is a concept called “functional zero,” or the point at which the number of people going into and out of homelessness is equal each month, and anyone who experiences it isn’t homeless for more than a few weeks. This does not mean no one will ever be seen sleeping on the streets: Community Solutions instead likens its strategy to a hospital that can take care of everyone who shows up, even if the medical staff can’t prevent them from getting sick.“Before we get to a place where no one ever has to experience homelessness, we need some milestone that shows we have a system that can be responsive,” said Beth Sandor, chief program officer at Community Solutions.Rockford is one of the country’s biggest success stories, having effectively ended the condition for veterans and chronically homeless individuals.Shannon Kopp and Angie Gibbons talking to a man sleeping in a tent behind a shopping mall in Rockford. He has refused to sleep in a warming center but agreed to accept some supplies and food.Back at the warming center on the night of the count, Douglas Webb, a 54-year-old Marine Corps veteran, provided an example of good news. The first time Mr. Webb visited the warming center at Second First, he said, was after an outreach worker found him under a mass of blankets in a parking garage. Now he works at the warming center in the winter.“I was able to pull myself out of it,” he said.Mr. Webb is part of what is perhaps the most encouraging story in homelessness. Measured by the Point-in-Time Count, homelessness among veterans nationwide has plunged 55 percent since 2010, as the federal government has poured money into housing and support programs for them.Mr. Webb noted that he paid $620 for a one-bedroom apartment, low by national standards. (Rockford’s rents are about half the national level, according to a rental index compiled by Zillow.) This is a reflection of the city’s economic malaise. In the hours before the count, Ms. Walker gave a brief tour of Rockford, with sights that included an abandoned factory that used to provide good paying jobs, the anchor storefront that used to be a Kmart, the boarded-up school where people sometimes live.An abandoned shelter, often used by people without homes, near a highway in a wooded area in Rockford.The city of 147,000 is a picture of Rust Belt decline, with problems that are a magnification of the country’s stratifying economy: Over the past several decades, its base of middle-class manufacturing jobs has withered and been replaced by low-wage retail work, creating a cycle of poverty, despair and crime.As Ms. Walker surveyed a deserted encampment made with tarps and PVC piping, she noted that some of the city’s success in fighting homelessness could be attributed to its decline. In other words, because there’s been so much disinvestment, Rockford’s housing is cheaper and more plentiful than elsewhere. And such is the irony of homelessness: Economically speaking, it’s easier to solve it in places where things are going poorly than where things are going well. More

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    Tech Layoffs Continue as Shares Fall and Interest Rates Rise

    Eighteen months ago, the online used car retailer Carvana had such great prospects that it was worth $80 billion. Now it is valued at less than $1.5 billion, a 98 percent plunge, and is struggling to survive.Many other tech companies are also seeing their fortunes reverse and their dreams dim. They are shedding employees, cutting back, watching their financial valuations shrivel — even as the larger economy chugs along with a low unemployment rate and a 3.2 percent annualized growth rate in the third quarter.One largely unacknowledged explanation: An unprecedented era of rock-bottom interest rates has abruptly ended. Money is no longer virtually free.For over a decade, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received a nod in less heady times. Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.It was a boom that seemed as if it would never end. Tech piled up victories, and its competitors wilted. Carvana built dozens of flashy car “vending machines” across the country, marketed itself relentlessly and offered very attractive prices for trade-ins.“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”Cheap money funded many of the acquisitions that substitute for organic growth in tech. Two years ago, as the pandemic raged and many office workers were confined to their homes, Salesforce bought the office communications tool Slack for $28 billion, a sum that some analysts thought was too high. Salesforce borrowed $10 billion to do the deal. This month, it said it was cutting 8,000 people, about 10 percent of its staff, many of them at Slack.Even the biggest tech companies are affected. Amazon was willing to lose money for years to acquire new customers. It is taking a different approach these days, laying off 18,000 office workers and shuttering operations that are not financially viable.Carvana, like many start-ups, pulled a page out of Amazon’s old playbook, trying to get big fast. Used cars, it believed, were a highly fragmented market ripe for reinvention, just the way taxis, bookstores and hotels had been. It strove to outdistance any competition.The company, based in Tempe, Ariz., wanted to replace traditional dealers with, Carvana said grandly, “technology and exceptional customer service.” In what seemed to symbolize the death of the old way of doing things, it paid $22 million for a six-acre site in Mission Valley, Calif., that a Mazda dealer had occupied since 1965.More on Big TechLayoffs: Some of the biggest tech companies, including Alphabet and Microsoft, have recently announced tens of thousands of job cuts. But even after the layoffs, their work forces are still behemoths.A Generational Divide: The industry’s recent job cuts have been eye-opening to young workers. But to older employees who experienced the dot-com bust, it has hardly been a shock.Supreme Court Cases: The justices are poised to reconsider two crucial tenets of online speech under which social media networks have long operated.In the Netherlands: Dutch government and educational organizations have spurred changes at Google, Microsoft and Zoom, using a European data protection law as a lever.Where traditional dealerships were literally flat, Carvana built multistory car vending machines that became memorable local landmarks. Customers picked up their cars at these towers, which now total 33. A corporate video of the building of one vending machine has over four million views on YouTube.In the third quarter of 2021, Carvana delivered 110,000 cars to customers, up 74 percent from 2020. The goal: two million cars a year, which would make it by far the largest used car retailer.An eye-catching Carvana car vending machine in Uniondale, N.Y.Tony Cenicola/The New York TimesThen, even more quickly than the company grew, it fell apart. When used car sales rose more than 25 percent in the first year of the pandemic, that created a supply problem: Carvana needed many more vehicles. It acquired a car auction company for $2.2 billion and took on even more debt at a premium interest rate. And it paid customers handsomely for cars.But as the pandemic waned and interest rates began to rise, sales slowed. Carvana, which declined to comment for this article, did a round of layoffs in May and another in November. Its chief executive, Ernie Garcia, blamed the higher cost of financing, saying, “We failed to accurately predict how all this will play out.”Some competitors are even worse off. Vroom, a Houston company, has seen its stock fall to $1 from $65 in mid-2020. Over the past year, it has dismissed half of its employees.“High rates are painful for almost everyone, but they are particularly painful for Silicon Valley,” said Kairong Xiao, an associate professor of finance at Columbia Business School. “I expect more layoffs and investment cuts unless the Fed reverses its tightening.”At the moment, there is little likelihood of that. The market expects two more rate increases by the Federal Reserve this year, to at least 5 percent.In real estate, that is trouble for anyone expecting a quick recovery. Low rates not only pushed up house prices but also made it irresistible for companies such as Zillow as well as Redfin, Opendoor Technologies and others, to get into a business that used to be considered slightly disreputable: flipping houses.In 2019, Zillow estimated it would soon have revenue of $20 billion from selling 5,000 houses a month. That thrilled investors, who pushed the publicly traded Seattle company to a $45 billion valuation and created a hiring boom that raised the number of employees to 8,000.Zillow’s notion was to use artificial intelligence software to make a chaotic real estate market more efficient, predictable and profitable. This was the sort of innovation that the venture capitalist Marc Andreessen talked about in 2011 when he said digital insurgents would take over entire industries. “Software is eating the world,” he wrote.In June 2021, Zillow owned 50 homes in California’s capital, Sacramento. Five months later, it had 400. One was an unremarkable four-bedroom, three-bath house in the northwest corner of the city. Built in 2001, it is convenient to several parks and the airport. Zillow paid $700,000 for it.Zillow put the house on the market for months, but no one wanted it, even at $625,000. Last fall, after it had unceremoniously exited the flipping market, Zillow unloaded the house for $355,000. Low rates had made it seem possible that Zillow could shoot for the moon, but even they could not make it a success.Ryan Lundquist, a Sacramento appraiser who followed the house’s history closely on his blog, said Zillow realized real estate was fragmented but perhaps did not quite appreciate that houses were labor-intensive, deeply personal, one-to-one transactions.“This idea of being able to come in and change the game completely — that’s really difficult to do, and most of the time you don’t,” he said.Zillow’s market value has now shrunk to $10 billion, and its employee count to around 5,500 after two rounds of layoffs. It declined to comment.The dream of market domination through software dies hard, however. Zillow recently made a deal with Opendoor, an online real estate company in San Francisco that buys and sells residential properties and has also been ravaged by the downturn. Under the agreement, sellers on Zillow’s platform can request to have Opendoor make offers on their homes. Zillow said sellers would “save themselves the stress and uncertainty of a traditional sale process.”That partnership might explain why the buyer of that four-bedroom Sacramento house, one of the last in Zillow’s portfolio, was none other than Opendoor. It made some modest improvements and put the house on the market for $632,000, nearly twice what it had paid. A deal is pending.“If it were really this easy, everyone would be a flipper,” Mr. Lundquist said.An Amazon bookstore in Seattle in 2016. The store is now permanently closed.Kyle Johnson for The New York TimesThe easy money era had been well established when Amazon decided it had mastered e-commerce enough to take on the physical world. Its plans to expand into bookstores was a rumor for years and finally happened in 2015. The media went wild. According to one well-circulated story, the retailer planned to open as many as 400 bookstores.The company’s idea was that the stores would function as extensions of its online operation. Reader reviews would guide the potential buyer. Titles were displayed face out, so there were only 6,000 of them. The stores were showrooms for Amazon’s electronics.Being a showroom for the internet is expensive. Amazon had to hire booksellers and lease storefronts in popular areas. And letting enthusiastic reviews be one of the selection criteria meant stocking self-published titles, some of which were pumped up with reviews by the authors’ friends. These were not books that readers wanted.Amazon likes to try new things, and that costs money. It took on another $10 billion of long-term debt in the first nine months of the year at a higher rate of interest than it was paying two years ago. This month, it said it was borrowing $8 billion more. Its stock market valuation has shrunk by about a trillion dollars.The retailer closed 68 stores last March, including not only bookstores but also pop-ups and so-called four-star stores. It continues to operate its Whole Foods grocery subsidiary, which has 500 U.S. locations, and other food stores. Amazon said in a statement that it was “committed to building great, long-term physical retail experiences and technologies.”Traditional book selling, where expectations are modest, may have an easier path now. Barnes & Noble, the bricks-and-mortar chain recently deemed all but dead, has moved into two former Amazon locations in Massachusetts, putting about 20,000 titles into each. The chain said the stores were doing “very well.” It is scouting other former Amazon locations.“Amazon did a very different bookstore than we’re doing,” said Janine Flanigan, Barnes & Noble’s director of store planning and design. “Our focus is books.” More

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    For Tech Companies, Years of Easy Money Yield to Hard Times

    Eighteen months ago, the online used car retailer Carvana had such great prospects that it was worth $80 billion. Now it is valued at less than $1.5 billion, a 98 percent plunge, and is struggling to survive.Many other tech companies are also seeing their fortunes reverse and their dreams dim. They are shedding employees, cutting back, watching their financial valuations shrivel — even as the larger economy chugs along with a low unemployment rate and a 3.2 annualized growth rate in the third quarter.One largely unacknowledged explanation: An unprecedented era of rock-bottom interest rates has abruptly ended. Money is no longer virtually free.For over a decade, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received a nod in less heady times. Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.It was a boom that seemed as if it would never end. Tech piled up victories, and its competitors wilted. Carvana built dozens of flashy car “vending machines” across the country, marketed itself relentlessly and offered very attractive prices for trade-ins.“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”Cheap money funded many of the acquisitions that substitute for organic growth in tech. Two years ago, as the pandemic raged and many office workers were confined to their homes, Salesforce bought the office communications tool Slack for $28 billion, a sum that some analysts thought was too high. Salesforce borrowed $10 billion to do the deal. This month, it said it was cutting 8,000 people, about 10 percent of its staff, many of them at Slack.Even the biggest tech companies are affected. Amazon was willing to lose money for years to acquire new customers. It is taking a different approach these days, laying off 18,000 office workers and shuttering operations that are not financially viable.Carvana, like many start-ups, pulled a page out of Amazon’s old playbook, trying to get big fast. Used cars, it believed, were a highly fragmented market ripe for reinvention, just the way taxis, bookstores and hotels had been. It strove to outdistance any competition.The company, based in Tempe, Ariz., wanted to replace traditional dealers with, Carvana said grandly, “technology and exceptional customer service.” In what seemed to symbolize the death of the old way of doing things, it paid $22 million for a six-acre site in Mission Valley, Calif., that a Mazda dealer had occupied since 1965.More on Big TechLayoffs: Some of the biggest tech companies, including Alphabet and Microsoft, have recently announced tens of thousands of job cuts. But even after the layoffs, their work forces are still behemoths.A Generational Divide: The industry’s recent job cuts have been eye-opening to young workers. But to older employees who experienced the dot-com bust, it has hardly been a shock.Supreme Court Cases: The justices are poised to reconsider two crucial tenets of online speech under which social media networks have long operated.In the Netherlands: Dutch government and educational organizations have spurred changes at Google, Microsoft and Zoom, using a European data protection law as a lever.Where traditional dealerships were literally flat, Carvana built multistory car vending machines that became memorable local landmarks. Customers picked up their cars at these towers, which now total 33. A corporate video of the building of one vending machine has over four million views on YouTube.In the third quarter of 2021, Carvana delivered 110,000 cars to customers, up 74 percent from 2020. The goal: two million cars a year, which would make it by far the largest used car retailer.An eye-catching Carvana car vending machine in Uniondale, N.Y.Tony Cenicola/The New York TimesThen, even more quickly than the company grew, it fell apart. When used car sales rose more than 25 percent in the first year of the pandemic, that created a supply problem: Carvana needed many more vehicles. It acquired a car auction company for $2.2 billion and took on even more debt at a premium interest rate. And it paid customers handsomely for cars.But as the pandemic waned and interest rates began to rise, sales slowed. Carvana, which declined to comment for this article, did a round of layoffs in May and another in November. Its chief executive, Ernie Garcia, blamed the higher cost of financing, saying, “We failed to accurately predict how all this will play out.”Some competitors are even worse off. Vroom, a Houston company, has seen its stock fall to $1 from $65 in mid-2020. Over the past year, it has dismissed half of its employees.“High rates are painful for almost everyone, but they are particularly painful for Silicon Valley,” said Kairong Xiao, an associate professor of finance at Columbia Business School. “I expect more layoffs and investment cuts unless the Fed reverses its tightening.”At the moment, there is little likelihood of that. The market expects two more rate increases by the Federal Reserve this year, to at least 5 percent.In real estate, that is trouble for anyone expecting a quick recovery. Low rates not only pushed up house prices but also made it irresistible for companies such as Zillow as well as Redfin, Opendoor Technologies and others, to get into a business that used to be considered slightly disreputable: flipping houses.In 2019, Zillow estimated it would soon have revenue of $20 billion from selling 5,000 houses a month. That thrilled investors, who pushed the publicly traded Seattle company to a $45 billion valuation and created a hiring boom that raised the number of employees to 8,000.Zillow’s notion was to use artificial intelligence software to make a chaotic real estate market more efficient, predictable and profitable. This was the sort of innovation that the venture capitalist Marc Andreessen talked about in 2011 when he said digital insurgents would take over entire industries. “Software is eating the world,” he wrote.In June 2021, Zillow owned 50 homes in California’s capital, Sacramento. Five months later, it had 400. One was an unremarkable four-bedroom, three-bath house in the northwest corner of the city. Built in 2001, it is convenient to several parks and the airport. Zillow paid $700,000 for it.Zillow put the house on the market for months, but no one wanted it, even at $625,000. Last fall, after it had unceremoniously exited the flipping market, Zillow unloaded the house for $355,000. Low rates had made it seem possible that Zillow could shoot for the moon, but even they could not make it a success.Ryan Lundquist, a Sacramento appraiser who followed the house’s history closely on his blog, said Zillow realized real estate was fragmented but perhaps did not quite appreciate that houses were labor-intensive, deeply personal, one-to-one transactions.“This idea of being able to come in and change the game completely — that’s really difficult to do, and most of the time you don’t,” he said.Zillow’s market value has now shrunk to $10 billion, and its employee count to around 5,500 after two rounds of layoffs. It declined to comment.The dream of market domination through software dies hard, however. Zillow recently made a deal with Opendoor, an online real estate company in San Francisco that buys and sells residential properties and has also been ravaged by the downturn. Under the agreement, sellers on Zillow’s platform can request to have Opendoor make offers on their homes. Zillow said sellers would “save themselves the stress and uncertainty of a traditional sale process.”That partnership might explain why the buyer of that four-bedroom Sacramento house, one of the last in Zillow’s portfolio, was none other than Opendoor. It made some modest improvements and put the house on the market for $632,000, nearly twice what it had paid. A deal is pending.“If it were really this easy, everyone would be a flipper,” Mr. Lundquist said.An Amazon bookstore in Seattle in 2016. The store is now permanently closed.Kyle Johnson for The New York TimesThe easy money era had been well established when Amazon decided it had mastered e-commerce enough to take on the physical world. Its plans to expand into bookstores was a rumor for years and finally happened in 2015. The media went wild. According to one well-circulated story, the retailer planned to open as many as 400 bookstores.The company’s idea was that the stores would function as extensions of its online operation. Reader reviews would guide the potential buyer. Titles were displayed face out, so there were only 6,000 of them. The stores were showrooms for Amazon’s electronics.Being a showroom for the internet is expensive. Amazon had to hire booksellers and lease storefronts in popular areas. And letting enthusiastic reviews be one of the selection criteria meant stocking self-published titles, some of which were pumped up with reviews by the authors’ friends. These were not books that readers wanted.Amazon likes to try new things, and that costs money. It took on another $10 billion of long-term debt in the first nine months of the year at a higher rate of interest than it was paying two years ago. This month, it said it was borrowing $8 billion more. Its stock market valuation has shrunk by about a trillion dollars.The retailer closed 68 stores last March, including not only bookstores but also pop-ups and so-called four-star stores. It continues to operate its Whole Foods grocery subsidiary, which has 500 U.S. locations, and other food stores. Amazon said in a statement that it was “committed to building great, long-term physical retail experiences and technologies.”Traditional book selling, where expectations are modest, may have an easier path now. Barnes & Noble, the bricks-and-mortar chain recently deemed all but dead, has moved into two former Amazon locations in Massachusetts, putting about 20,000 titles into each. The chain said the stores were doing “very well.” It is scouting other former Amazon locations.“Amazon did a very different bookstore than we’re doing,” said Janine Flanigan, Barnes & Noble’s director of store planning and design. “Our focus is books.” More

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    What TikTok Told Us About the Economy in 2022

    From Barbiecore to revenge travel, social media trends gave us a clear picture of the forces reshaping the economy.The unemployment rate has hovered at 3.7 percent for months. But it is the TikTok-famous “quiet quitting” and live-tweeted resignations that really explained what was going on in America’s job market in 2022, a moment of renewed worker power and remarkable upheaval.While government data can tell us that the world is rapidly changing three years into the pandemic, internet trends — the ones that took off and the apps we’ve come to rely on — illustrate how people are responding to a new and evolving normal.Negroni sbagliatos catapulted into fame and onto cocktail menus, underlining the fact that people were ready to get back to spending on fancy happy hours. Instagram feeds filled with beach and mountain pictures as “revenge travel” took flight. We collectively learned what “vibe shift” means just as we realized that the economy was experiencing one.Below is a rundown of a few of the year’s more colorful memes and moments — and what they herald for 2023.Break My SoulBeyoncé imprinted the moment with her instant hit titled “Break My Soul.”Chris Pizzello/Invision, via Associated PressBetween high inflation and years of workplace flux — including pandemic firings, work-from-home burnout and most recently a plodding return to office — the economic status quo seemed like an increasingly bad deal to many Americans in 2022. Beyoncé imprinted the discontent on your favorite music app, releasing an instant hit titled “Break My Soul.” Its lyrics included “And I just quit my job, I’m gonna find new drive,” inspiring the internet to ask whether Queen B was encouraging everyone to join the Great Resignation.In fact, people felt so conflicted about work this year that they needed new words to describe it. The TikTok discourse gave us “quiet quitting,” a trend in which workers do the bare minimum. Then came “career cushioning,” discreetly lining up a backup plan while in your current job. At the same time, employers reported “worker hoarding,” in which they avoided firing people after getting burned by long months in which open jobs far outnumbered applicants. The jobs data made it clear that the labor market was out of balance, but it was social discussion that showed just how much.Money Printer Go ‘Brrrr-oke’The Federal Reserve reversed two years of rock-bottom rates this year, raising borrowing costs at the fastest pace in decades in a bid to control rapid inflation. Actual prices have been slow to react, but Reddit wasn’t. Jerome H. Powell, the Fed chair, formerly featured in memes that sported the tagline “money printer go brrrr” and showed him cranking out cheap and easy cash. In 2022, the memes got an update — to Shrek. Today’s memes compare Mr. Powell to the 2001 movie character Lord Farquaad, who famously declared, “Some of you may die, but that is a sacrifice I’m willing to make.”The crankiness on the Reddit discussion boards came as the Fed’s actions cost many investors money. Prominent cryptocurrencies tanked, and asset prices in general swooned, with stocks down about 20 percent from the start of the year. Financial markets are likely to remain on edge into 2023: Inflation is slowing but remains high, and the Fed is poised to raise rates at least slightly more to control it. The memes, in short, are likely to remain grim.Butter BoardsTikTok spent part of this year going crazy for butter boards. Sizie Cornell, via Associated PressTikTok spent part of this year going crazy for butter boards: slabs of the spread covered in flowers, fancy salt, honey or other flavorings. Was this a delayed reaction to the low-fat, no-fat fads of decades past? Evidence that influencers can make us do anything? One thing we can say for sure: It was expensive.That’s because prices for food — and especially for dairy products — have jumped sharply this year. Butter and margarine costs were 34 percent higher in November than 12 months before. Food overall was up 10.6 percent.But as the butter board’s enduring popularity underscored, people buy food even when it is getting costlier. In fact, while retailers reported that some lower-income consumers began pulling back on discretionary purchases and giving priority to necessities, spending in general has been fairly resilient despite a year and a half of rapid price increases and months of Fed rate moves.So far, inflation also remains heady, and it extends well beyond the dairy aisle. A popular price index is still 7.1 percent above its level a year ago, far faster than the typical 2 percent annual pace.BarbiecoreActor Margo Robbie in character in the film “Barbie.”Jaap Buitendijk/Warner Bros. Pictures, via Associated PressAmericans continued to shop in 2022, but what they are buying has been undergoing a quiet change. Americans had been snapping up goods like couches and clothing early in the pandemic, but they are now slowly shifting their purchases back toward services.Social media popularized over-the-top fashions in 2022, including “Barbiecore” (very pink, named for the doll and upcoming movie) and “avant apocalypse,” which paid sartorial homage to the coming end days. But another big trend of the year — buying used clothes, #thrifted — may have more accurately captured the year’s changing economic energy. Clothing store sales are slowing down, official data show, and falling outright if you subtract out apparel inflation.Have a Reservation?As the world reopened and Americans returned to spending on experiences, restaurant tables, in particular, became a hot commodity. Walk-in tables were down 14 percent compared with 2019, while tables with online reservations increased by 24 percent, according to data from the table booking app OpenTable. The figures confirmed what denizens of New York and other cities could tell you (and did, in various media dissections): It was a battle to get a table in 2022 as waitstaff shortages collided with hot diner demand.OpenTable’s data show that happy hour especially surged in 2022. People are dining earlier, and, after years of missed work drinks, this is the overpriced cocktail’s comeback tour. It’s one added reason that Negronis made with Prosecco, popularized by a promotional video for the show “House of the Dragon” on HBO’s TikTok account, are having a moment.Negroni cocktails where popularized by a promotional video for the show “House of the Dragon.”Leah Nash for The New York TimesNo Room at the InnIt turns out people missed the beach just as much as they missed that 5 o’clock martini. Cue the “revenge travel.”Vacationers made up for pandemic-delayed trips en masse in 2022, and as they splurged on big adventures, air traffic rebounded sharply, getting close to its 2019 levels. Hotel revenues fully recovered. At the same time, some travel-related sectors skated by on extremely thin staffing. Employment in accommodation stands at just 83 percent of its February 2020 level. Air transport employment overall is up, but industry groups have complained of worker shortages in key areas like air traffic control.As hotels, motels and airlines struggled to operate at full capacity, room rates and fares rocketed higher and major disruptions became commonplace. Air travel service complaints were more than 380 percent above their 2019 level as of September, according to the Department of Transportation. The mismatch underscored that key parts of the American economy are struggling to reach a new equilibrium after pandemic-induced tumult, even if people want to be in #vacationmode.Peak WeddingIn some instances, pandemic trends are colliding with demographic trends — and nothing showed that more clearly than the many wedding photos that filled up Instagram feeds this year. After years of historically few ceremonies leading up to the pandemic, this was probably the biggest year for weddings since 1997, based on data and forecasts compiled by the Wedding Report, a trade publication.Always, Always, Always a BridesmaidYou might have noticed a lot of wedding invitations in 2022. It was probably the biggest year for tying the knot since 1997.

    Note: Future data represent forecastsSource: The Wedding ReportBy The New York TimesThe pop, the combined result of pandemic-delayed nuptials and a big group of marriage-age millennials, translated into booked-up venues and vendors. It has also raised questions about the economic ripple effects: Will those couples have children, sending up birth data, which already ticked up slightly in 2021? Will they buy houses? We could start to find out in 2023.GrandmillennialTikTok sensation Tariq, known for his love of corn.OK McCausland for The New York TimesAmerica’s younger generations are doing more than getting married. They have been forming their own households and buying houses in greater numbers since the start of the pandemic. In the process, they have helped to fuel strong demand for houses and popularized interior decorating trends — including “grandmillennial,” also affectionately called “granny chic” on Pinterest, in which the young-ish repurpose floral wallpaper and old-style lamps for a cozy but updated look.But many millennials, who are roughly ages 26 to 41 and in their peak home-buying years, may be losing their shot at becoming real estate influencers. As the Fed lifted interest rates to stifle rapid inflation this year, a wave of would-be homeowners began to find that the combination of heftier mortgage costs and high home prices meant they could not afford to buy. New home sales have declined notably. Fed rates are expected to continue climbing in 2023, which could make for a tough road ahead for a generation struggling to make the leap in homeownership. And after a year of serious economic changes and major policy adjustments, it’s uncertain what is coming next: A recession? A benign inflation cool-down?On the bright side, we will have social trends to help us interpret the data, and occasionally to help us find its lighter side. To quote corn kid, a precocious vegetable lover who ascended to TikTok royalty in 2022: “I can’t imagine a more beautiful thing.”Reporting was contributed by More

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    Why It’s Hard to Predict What the Economy Will Look Like in 2023

    Historical data has always been critical to those who make economic predictions. But three years into the pandemic, America is suffering through an economic whiplash of sorts — and the past is proving anything but a reliable guide.Forecasts have been upended repeatedly. The economy’s rebound from the hit it incurred at the onset of the coronavirus was faster and stronger than expected. Shortages of goods then collided with strong demand to fuel a burst in inflation, one that has been both more extreme and more stubborn than anticipated.Now, after a year in which the Federal Reserve raised interest rates at the fastest pace since the 1980s to slow growth and bring those rapid price increases back under control, central bankers, Wall Street economists and Biden administration officials are all trying to guess what might lie ahead for the economy in 2023. Will the Fed’s policies spur a recession? Or will the economy gently cool down, taming high inflation in the process?With typical patterns still out of whack across big parts of the economy — including housing, cars and the labor market — the answer is far from certain, and past experience is almost sure to serve as a poor map.“I don’t think anyone knows whether we’re going to have a recession or not, and if we do, whether it’s going to be a deep one or not,” Jerome H. Powell, the Fed chair, said during a news conference last week. “It’s not knowable.”Doubt about what comes next is one reason the Fed is reorienting its monetary policy approach. Officials are now nudging borrowing costs up more gradually, giving them time to see how their policies are affecting the economy and how much more is needed to ensure that inflation returns to a slow and steady pace.As policymakers try to guess what lies ahead, the markets that have been most disrupted in recent years illustrate how big changes — some spurred by the pandemic, others tied to demographic shifts — continue to ricochet through the economy and make forecasting an exercise in uncertainty.Housing is strange.The pandemic era has repeatedly upended the housing market. The virus’s onset sent urbanites rushing for more space in suburban and small-city homes, a trend that was reinforced by rock-bottom mortgage rates.Then, reopenings from lockdown pulled people back toward cities. That helped push up rents in major metropolitan areas — which make up a big chunk of inflation — and, paired with the Fed’s rate increases, it has helped to sharply slow home buying in many markets.The question is what happens next. When it comes to the rental market, new lease data from Zillow and Apartment List suggests that conditions are cooling. The supply of available apartments and homes is also expected to climb in 2023 as long-awaited new residential buildings are finished.The Biden PresidencyHere’s where the president stands after the midterm elections.A New Primary Calendar: President Biden’s push to reorder the early presidential nominating states is likely to reward candidates who connect with the party’s most loyal voters.A Defining Issue: The shape of Russia’s war in Ukraine, and its effects on global markets, in the months and years to come could determine Mr. Biden’s political fate.Beating the Odds: Mr. Biden had the best midterms of any president in 20 years, but he still faces the sobering reality of a Republican-controlled House for the next two years.2024 Questions: Mr. Biden feels buoyant after the better-than-expected midterms, but as he turns 80, he confronts a decision on whether to run again that has some Democrats uncomfortable.“The frame I would put on 2023 is that we’re really going to enter the year back in a demand-constrained environment,” said Igor Popov, chief economist at Apartment List. “We’re going to see more apartments competing for fewer renters.”Mr. Popov expects “small growth” in rents in 2023, but he said that outlook is uncertain and hinges on the state of the labor market. If unemployment soars, rents could fall. If workers do really well, rents could rise more quickly.At the same time, existing leases are still catching up to the big run-up that has happened over the past year as tenants renew at higher rates. It is hard to guess both how much official inflation will converge with market-based rent data, and how long the trend will take to fully play out.“It could resolve in months, or it could take a year,” said Adam Ozimek, the chief economist at the Economic Innovation Group.Then there’s the market for owned housing, which does not count into inflation but does matter for the pace of overall economic growth. New home sales have fallen off a cliff as surging mortgage costs and the recent price run-up has put purchasing a house out of reach for many families. Even so, new mortgage applications have ticked up at the slightest sign of relief in recent months, evidence that would-be buyers are waiting on the sidelines.Demographics explain that underlying demand. Many millennials, the roughly 26- to 41-year-olds who are America’s largest generation, were entering peak home-buying ages right around the onset of the pandemic, and many are still in the market — which could put a floor under how much home prices will moderate.Plus, “sellers don’t have to sell,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association, who expects home prices to be “flattish” next year as demand wanes but supply, which was already sharply limited after a decade of under-building following the 2007 housing crash, further pulls back.Given all the moving parts, many analysts are either much more optimistic or very pessimistic.“It’s almost comical to see the house price growth forecasts,” Mr. Popov said. “It’s either 3 percent growth or double-digit declines, with almost nothing in between.”The car market remains weird, too.The car market, a major driver of America’s initial inflation burst, is another economic puzzle. Years of too little supply have unleashed pent-up demand that is spurring unusual consumer and company behavior.Used cars were in especially short supply early in the pandemic, but are finally more widely available. The wholesale prices that dealers pay to stock their lots have plummeted in recent months.But car sellers are taking longer to pass those steep declines along to consumers than many economists had expected. Wholesale prices are down about 14.2 percent from a year ago, while consumer prices for used cars and trucks have declined only 3.3 percent. Many experts think that means bigger markdowns are coming, but there’s uncertainty about how soon and how steep.The new car market is even stranger. It remains undersupplied amid a parts shortages, though that is beginning to change as supply chain issues ease and production recovers. But both dealers and auto companies have made big profits during the low-supply, high-price era, and some have floated the idea of maintaining leaner production and inventories to keep their returns high.Jonathan Smoke, chief economist at Cox Automotive, thinks the normal laws of supply and demand will eventually reassert themselves as companies fight to retain customers. But getting back to normal will be a gradual, and perhaps halting, process.Still, “we’re at an inflection point,” Mr. Smoke said. “I think new vehicles are going to be less and less inflationary.”Labor markets are the most important question mark.Perhaps the most critical economic mystery is what will happen next in America’s labor market — and that is hard to game out.Part of the problem is that it’s not entirely clear what is happening in the labor market right now. Most signs suggest that hiring has been strong, job openings are plentiful, and wages are climbing at the fastest pace in decades. But there is a huge divergence between different data series: The Labor Department’s survey of households shows much weaker hiring growth than its survey of employers. Adding to the confusion, recent research has suggested that revisions could make today’s labor growth look much more lackluster.“It’s a huge mystery,” said Mr. Ozimek from the Economic Innovation Group. “You have to figure out which data are wrong.”That confusion makes guessing what comes next even more difficult. If, like most economists, one accepts that the labor market is hot right now, Fed policy is clearly poised to cool it down: The central bank has raised interest rates from near zero to about 4.4 percent this year, and expects to lift them to 5.1 percent in 2023.Those moves are explicitly aimed at slowing down hiring and wage growth, because central bankers believe that inflation for many types of services will remain elevated if pay gains remain as strong as they are now. Dentist offices and restaurants will, in theory, try to pass climbing labor costs along to consumers to protect their profits. But it is unclear how much the job market needs to slow to bring pay gains back to the more normal levels the Fed is looking for, and whether it can decelerate sufficiently without plunging America into a painful recession.Companies seem to be facing major labor shortages, partly as a wave of baby boomers retires, and Fed officials hope that will make firms more inclined to hang onto their workers even if the broader economy slows drastically. Some policymakers have suggested that such “labor hoarding” could help them achieve a soft landing that bucks historical precedent: Unemployment could rise notably without spiraling higher, cooling the economy without tipping it into a painful downturn.Typically, when the unemployment rate rises by more than 0.5 percentage points, like the Fed forecasts it will do next year, the jobless rate keeps rising. Loss of economic momentum feeds on itself, and the nation plunges into a recession. That pattern is so established it has a name: the Sahm Rule, for the economist Claudia Sahm.Yet Ms. Sahm herself said that if the axiom were to break down, this wacky economic moment would be the time. Consumers are sitting on unusual savings piles that could help sustain middle-class spending even through some job losses, preventing a downward spiral.“The thing that has never happened would have to happen,” she said. “But hey, things that have never happened have been happening left and right.” More

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    What Comes Next for the Most Empty Downtown in America

    The coffee rush. The lunch rush. The columns of headphone-equipped tech workers rushing in and out of train stations. The lanyard-wearing visitors who crowded the sidewalks when a big conference was in town.There was a time three years ago when a walk through downtown San Francisco was a picture of what it meant for a city to be economically successful. Take the five-minute jaunt from the office building at 140 New Montgomery Street to a line-out-the-door salad shop nearby.The 26-story building, an Art Deco landmark that was once the tallest in the city, began its life as the headquarters for the Pacific Telephone & Telegraph Company. Decades later, it served as the home of the local search company Yelp. The nearby salad store was part of a fast-growing chain called Mixt.Yelp and Mixt had little more than proximity in common, which at that time was enough. Yelp was an idea that became billions of dollars in value on the internet. Mixt was a booming business serving lunchtime salads to the workers who traveled on electrified trains and skateboards to their jobs in downtown cubicles.Their virtuous cycle of nearness, of new ideas becoming new companies, feeding other ideas that become other companies, was the template for urban growth.Businesses like Yelp took root in the high-energy, high-density city; chains like Mixt flourished alongside them as their workers ventured out for lunch. As downtowns have emptied out, their once-symbiotic relationship is coming undone.“This area was always packed with people,” recalled Maria Cerros-Mercado, a Mixt manager who built her career in food service downtown. “People would get off the BART, buy coffee, buy this, buy that. There was always just so much walking.”Today San Francisco has what is perhaps the most deserted major downtown in America. On any given week, office buildings are at about 40 percent of their prepandemic occupancy, while the vacancy rate has jumped to 24 percent from 5 percent since 2019. Occupancy of the city’s offices is roughly 7 percentage points below that of those in the average major American city, according to Kastle, the building security firm.Yelp had its offices in this 26-story building at 140 New Montgomery Street in San Francisco but left after the pandemic began.More ominous for the city is that its downtown business district — the bedrock of its economy and tax base — revolves around a technology industry that is uniquely equipped and enthusiastic about letting workers stay home indefinitely. In the space of a few months, Jeremy Stoppelman, the chief executive of Yelp, went from running a company that was rooted in the city to vacating Yelp’s longtime headquarters and allowing its roughly 4,400 employees to work from anywhere in their country.“I feel like I’ve seen the future,” he said.Decisions like that, played out across thousands of remote and hybrid work arrangements, have forced office owners and the businesses that rely on them to figure out what’s next. This has made the San Francisco area something of a test case in the multibillion-dollar question of what the nation’s central business districts will look like when an increased amount of business is done at home.“Imagine a forest where an entire species suddenly disappears,” said Tracy Hadden Loh, a fellow at the Brookings Institution who studies urban real estate. “It disrupts the whole ecosystem and produces a lot of chaos. The same thing is happening in downtowns.”The city’s chief economist, Ted Egan, has warned about a looming loss of tax revenue as vacancies pile up. Brokers have tried to counter that narrative by talking up a “flight to quality” in which companies upgrade to higher-end space. Business groups and city leaders hope to recast the urban core as a more residential neighborhood built around people as well as businesses but leave out that office rents would probably have to plunge for those plans to be viable.Below the surface of spin is a downtown that is trying to adapt to what amounts to a three-day workweek. During a recent lunch at a Mixt location in the financial district, the company’s chief executive, Leslie Silverglide, pointed to the line of badge-holding workers and competition for outdoor tables. It was also, she noted, a Wednesday — what passes for rush hour. On Wednesdays, offices in San Francisco are at roughly 50 percent of their prepandemic levels; on Fridays, they’re not even at 30 percent.A park in downtown San Francisco. On any given week, office buildings are at about 40 percent of their prepandemic occupancy.The lunchtime business downtown is not, and may never, be what it used to be. But if workers aren’t going to return to buying their $17 salads downtown, Mixt will follow them home.Which is why on a recent Wednesday morning, one of Mixt’s managers, Ms. Cerros-Mercado, 35, stood on a mostly empty sidewalk waiting for an Uber (another company that told most of its employees they can work half their time from home).More on CaliforniaBan on Flavored Tobacco: The Supreme Court refused to block a California law banning flavored tobacco, clearing the way for the ban to take effect.L.A.’s New Mayor: Vice President Kamala Harris swore in Karen Bass as the first female mayor of the nation’s second-largest city in a ceremony that celebrated her historic win but also underscored the obstacles ahead.Employee Strike: Postdoctoral students and academic researchers at the University of California said that they would return to work, partly ending a weekslong strike to demand higher pay. Some 36,000 workers remain on strike.A Piece of Black History Destroyed: Lincoln Heights — a historically Black community in a predominantly white, rural county in Northern California — endured for decades. Then came the Mill fire.Ms. Cerros-Mercado lives in San Francisco and used to walk downtown for work but now manages a Mixt branch in Mill Valley, a Marin County suburb that has 14,000 people and $2 million starter homes.Many of the former office workers who live there have yet to return downtown en masse, but their purchases over the past three years have shown that they still want downtown perks and services like a freshly prepared lunch. Mixt opened the Mill Valley location this year as part of a push to generate more business in residential neighborhoods and suburbs.Just before 7:30 a.m. on that recent Wednesday, Ms. Cerros-Mercado watched her Uber pull up outside a downtown Whole Foods so she could start her commute to the suburbs. It proceeded along the sleepy streets where she used to work — past coffee-shops and dim sum restaurants, past the glass towers and the boarded-up storefronts — and sped across the Golden Gate Bridge toward Marin.The Creative ClassAs it happens, Yelp was inspired by a flu.Mr. Stoppelman, 45, contracted the virus shortly after returning to the Bay Area from business school. This was in 2004, back when the internet had enough information that you could find something about anything, yet was also still new enough that the information was rarely more detailed than what you could find in the Yellow Pages. When Mr. Stoppelman went online to find a doctor and was confronted by a bunch of phone and suite numbers but little about the actual physicians, it gave him an idea.Jeremy Stoppelman, chief executive of Yelp, decided to allow its 4,400 employees to work from anywhere in the country.Aaron Wojack for The New York TimesYelp began as a word-of-mouth email service before morphing into the local review and directory site that is now worth about $2 billion. That he had a good idea was less important to the company’s success than the Bay Area’s tech ecosystem — the experience and social connections Mr. Stoppelman gained from his previous job at PayPal helped him procure $1 million in start-up funding.Another factor, Mr. Stoppelman said, was a crucial decision, unusual at the time, to locate the company in a San Francisco office building instead of a Silicon Valley office park.“I’m not sure that Yelp would have succeeded if we weren’t in the city,” he said. “When you’re in a city, there’s lots of places you might go, and an efficient way to sort through the possibilities is important. Yelp was a killer app for the city.”San Francisco is about 40 miles from the heart of Silicon Valley, which for the most part consists of low-slung suburban cities that sit along U.S. 101 and have sprawling office campuses surrounded by acres of parking. Until fairly recently, however, the city was considered a subpar place for start-ups.The downtown business district had historically revolved around banks and insurance companies. And the wave of tech companies that sprouted up in San Francisco during the dot-com boom of the late 1990s became symbols of that period’s delusions when they went out of business during the dot-com bust. Mr. Stoppelman said the surplus of fly-by-night companies gave credence to a joke that circulated around PayPal: Start-ups do better in the suburbs because their workers have less to do outside the office.But the bust provided an opportunity in the form of cheap office space that proliferated through the city’s South of Market neighborhood, which sits next to the financial district. Besides, for a new generation of start-up founders like Mr. Stoppelman, who was in his 20s and single when Yelp started, the city just seemed more fun.In San Francisco, and around the country, a growing preference for urban living was showing up in surveys, condo prices and pour-over coffee shops. Economists like Edward Glaeser at Harvard and Richard Florida at the University of Toronto distilled this movement into a sort of new urban theory that said cities were benefiting from several converging trends, including a more tech-driven economy, plunging crime rates and the bubble of young millennials entering the work force.Downtown San Francisco in December. Until 2020, the area was packed with people.In his 2002 book, “Rise of the Creative Class,” Mr. Florida posited that instead of seeking lower taxes and operating costs or locating near suburban enclaves with good schools, companies like Yelp were sprouting in cities rich with the design and engineering workers their businesses needed to grow. He parlayed the book’s success into a consulting firm, the Creative Class Group, which advises cities on strategies for attracting young workers.The advice — find educated workers, create dense fun neighborhoods and embrace social liberalism — could be reduced, effectively, to “become more like San Francisco.”An irony of San Francisco’s emerging status as an economic bellwether was that until the Great Recession, when a plunge in tax revenue prompted the local government to go scrambling for ways to stimulate growth, the city had made no special effort to attract tech companies. In the wake of the downturn, however, the city altered its tax code to be more welcoming to start-ups, while office owners started offering the shorter leases start-ups desire and open floor plans that allow companies to cram more people together.Less than a decade later, a city that was never more than a Silicon Valley satellite was the epicenter of a new boom, with companies like Twitter, Lyft, Uber, Dropbox, Reddit and Airbnb all setting up inside the city limits. And the employees who worked there needed lunch.Ms. Cerros-Mercado, who grew up in the city, watched this unfold while building her career at Specialty’s, a local cafe and sandwich chain known for its giant cookies. She started working there for about $10 an hour and regarded it as a stopping off point that would help support her children as she went through college, with the hopes that she would later go to nursing school.But she came to like it and rose from being a cashier to a kitchen manager and then general manager who made $80,000 with time off, along with dental and health benefits. The main location where she worked was downtown, next to a Mixt restaurant whose lines spilled onto the street.The Creative Class and Its DiscontentsEmpty seats at a restaurant in downtown San Francisco, perhaps the most deserted business district in America.For the optimized office worker looking for the trifecta of fast, healthy and filling, few meals are more efficient than a pile of veggies and some dressing swirled with tofu or grilled chicken. Unfortunately, the aspirations of a salad are often dashed by the difficulty of making one that is actually good. The ingredients come from every corner of the supermarket, and if they aren’t combined in the right proportions, or if they are made too far in advance, every bite is a drag.Ms. Silverglide, 42, the chief executive of Mixt, tried to solve this problem with a setup in which customers proceeded down a counter and called out ingredients like grilled chicken and roasted brussels sprouts while stipulating exactly how much dressing they wanted. She said the naysayers of the time told her that there weren’t enough salad eaters to sustain her company, or that only women would eat there.Instead, lines extended down the block, and Yelp’s users gave the business three and a half stars. People like Mike Ghaffary discovered a healthier kind of lunch in a restaurant where customization was encouraged.Mr. Ghaffary is a former Yelp executive and serial optimizer who went to Mixt in search of a vegan meal that was high in protein and low in sugar. The salad he came up with paired lentils, chickpeas and quinoa with greens and a cilantro jalapeño vinaigrette.Over the next several years, as Yelp grew and went public, Mixt thrived alongside it, adding a dozen locations through downtown and other city neighborhoods. Mr. Ghaffary became something of a Mixt evangelist (“He was very proud of the beany salad he came up with,” Mr. Stoppelman said) and ordered his vegetal concoction so frequently that the salad was added to the permanent menu and still sits on the board under the name “Be Well.”In the city, however, well-being was taking a hit.The tech companies that San Francisco had tried so hard to attract were now the target of regular protests, including some by demonstrators who at the end of 2013 began blocking commuter buses from Google and other companies to show their rage at rents that now sit at a median of $3,600. This was an opening gesture in what would become an ongoing debate about gentrification and the effect of tech companies on the city — a debate that played out in arguments over homeless camps, votes to stop development and countless more protests.All of this was rooted in the cost of housing, which had been expensive for decades but had morphed into a disaster. A local government that had all but begged tech companies to set up shop there was now pushing a raft of new taxes to deal with its spiraling affordable housing and homelessness problems. In 2017, the year the Salesforce Tower eclipsed the Transamerica Pyramid as the city’s tallest skyscraper, Mr. Florida published another book. It was called “The New Urban Crisis.”Ramps to the Salesforce Transit center in San Francisco. The vacancy rate for downtown offices has risen to 24 percent from 5 percent since 2019.An axiom of the post-Covid economy is that the pandemic didn’t create new trends so much as it accelerated trends already in place. Such is the case with Yelp, which long ago started moving employees in response to San Francisco’s rising cost of living, opening sales offices around the country and new engineering hubs in London and Toronto.Still, it was hard to see how that might pose any kind of threat to the city, whose greatest challenge seemed to be dealing with the too many jobs it already had.Expansions aside, Yelp was still ensconced in its headquarters at 140 New Montgomery, and by early 2020, it had every intention of signing a new lease. The company’s ties to San Francisco, the hold of the creative class and all that, were too strong to imagine anything in its place.Headquartered in the Cloud“Have you heard about Covid?”Ms. Cerros-Mercado remembers asking a regional manager at Specialty’s that question sometime in February or early March of 2020. The virus had been in the news for weeks, but it didn’t seem like more than a seasonal bug until her 19-year-old daughter’s school trip to Spain was canceled. The manager she asked wasn’t so sure.“He’s like, ‘Oh, it’s just a flulike virus; it will go away,” she said. “And I’m looking at him and telling him, ‘No, this is actually really serious.’”Ms. Cerros-Mercado described the following weeks as a blur of plunging sales and eerie moments like standing in a coffee shop with no customers or hearing from a janitor that the offices above them were clearing out. By May, Specialty’s had filed for Chapter 7 bankruptcy after a conference call in which she and other managers were thanked for their service and told they would be employed for three more days, during which they would deliver the news they had just received to the people who worked for them.“One of the hardest conversations was having to talk to my team,” she said. “I had some team members that were crying because they weren’t sure where their income was going to come from.”In that moment, the question was when life would return to how it was. But as Mr. Stoppelman discovered that he could run a publicly traded company from his home with no loss of business, he decided that for his company, anyway, the new normal was better. Yelp abandoned its headquarters when the lease at 140 New Montgomery lapsed, joining a growing list of tech companies that had replaced free cafeterias and Ping-Pong breakrooms — which for more than a decade had been rationalized by a belief that a social company was a more innovative company — with slogans like “headquartered in the cloud.”Yelp ended up adding back about 50,000 feet for employees who want an occasional desk, but for the city that figure is even smaller than it seems. The new offices are one-third of its former footprint; Yelp subleased the space from Salesforce — the city’s largest private employer, which is also cutting back on local offices.The emptying of American downtowns after Covid was followed by a boom in exurban housing and in cities like Austin and Spokane, trends reflected in where Yelp’s work force has landed. Cortney Ward, 41, a Yelp product designer, bought a home in Austin after leaving her one-bedroom apartment in San Francisco’s Nob Hill. Yelp workers also invented new habits and left holes in the businesses that relied on them. When Diego Waxemberg, 30, a software engineer, left the Bay Area for Charlotte, N.C., he started lunching on leftovers instead of sometimes buying a $17 Mixt salad with tri-tip steak. Mackenzie Bise, 30, who works in user operations, moved to the Sacramento area, and during a recent online search discovered that her favorite San Francisco lunch spot had gone out of business.Maria Cerros-Mercado preparing the Mixt salad shop in Mill Valley to open for the day.During the height of the pandemic, Ms. Cerros-Mercado went through a spell of unemployment before landing at another restaurant chain and later at Mixt. But downtown business was still somewhere between lagging and nonexistent. Mixt laid off hundreds of workers, closed most downtown stores for more than a year and subsisted on business from neighborhood and suburban stores.“If we didn’t have the neighborhood restaurants, we wouldn’t have survived — point blank,” Ms. Silverglide said.But for all the daily rhythms that were upended by home offices, the desire for a specially prepared lunch seems to have endured. Consider Mr. Ghaffary, creator of the Be Well salad, who used the pandemic as a challenge to recreate Mixt’s setup in the kitchen of his Marin County home. He started with fresh ingredients but got tired of his frequent trips to the grocery store and shifted to preparing them in bulk.“I’d make like four or five days of Tupperware,” he said. “First I tried making the whole salad, and then it would get soggy. Then I made half the salad and would finish the rest at the end.”“I was very proud of my streamlined production methods,” he continued. “And then I was kind of like, ‘I don’t want to be making these salads.’”Mr. Ghaffary told this story over salad at Mixt’s Mill Valley store, the one Ms. Cerros-Mercado manages, which opened in July and had lines of customers in athleisure. Operations are slightly more difficult because some employees commute an hour or more to get there, most relying on buses and one sometimes trying to catch a ride in Ms. Cerros-Mercado’s Uber. When a worker misses the bus, Ms. Cerros-Mercado spends her morning trying to cover for holes in the setup line.But the business was steady, and according to Ms. Silverglide it extends until 9 at night, catering to families and a growing salad-for-dinner segment that pairs plates of greens with the various wines and craft beers recently added to the menu. She is fairly confident that Mixt’s “neighborhood locations,” like the Mill Valley one, will drive the business’s expansion. Business in downtown San Francisco has been picking up — but it’s unclear how long that will last, or how close to prepandemic traffic it will ever reach. The offices, after all, haven’t even hit 50 percent.Better TogetherThe building at 140 New Montgomery Street is empty but still an Art Deco landmark.A wood reception desk that used to greet Yelp’s visitors sits empty in its former office. The mounted iPad where visitors once checked in is gone, along with the bright jars of candy and the rows of desks that sat beyond them. But there are still views.“You can see that you get good natural light all around,” said Stacey Spurr, a regional director for Pembroke, which owns 140 New Montgomery, during a recent tour of the quiet and empty but still quite gorgeous building.Ms. Spurr began the tour by pointing out the gold ceilings in the lobby before proceeding to the basement, where there are showers and bike racks. The empty floors upstairs are layered with boastful stickers like the one about the building’s A-plus air filtration system.The nearly 160,000 square feet that Yelp left empty is about half of the building’s space, and about half of that has been re-leased. The good news for Pembroke seems less good for the city. Some of the new tenants are finance and venture capital firms that have clung to the gravitas of a physical office for client meetings and the occasional conference but are unlikely to contribute regular foot traffic, according to building owners across the city.In a typical downturn, the turnaround is a fairly simple equation of rents falling far enough to attract new tenants and the economy improving fast enough to stimulate new demand. But now there’s a more existential question of what the point of a city’s downtown even is.Downtown San Francisco is trying to adapt to what amounts to a three-day workweek. On Wednesdays, offices are at 50 percent of their prepandemic levels; on Fridays, they’re not even at 30 percent.The city, and business groups like Advance SF, are trying to reframe the urban core as a more residential and entertainment district that draws from throughout the region and may in the future involve the conversion of office buildings to residential use. The motto is “Better Together,” and Advance SF recently hosted a forum with a guest economist to discuss new ideas for downtown. The guest was Richard Florida.“When I started with the creative class, places didn’t care about young people, they were only trying to attract a family with children to the lovely suburbs, and I’m saying, ‘No, no, no, no, no,’” Mr. Florida said in an interview. “Twenty years later, people forgot about the families. And now here’s a whole generation leaving cities again, for metropolitan or virtual suburbs.”The more businesses invest with that new reality in mind, the more likely that reality becomes self-fulfilling.A year after being consumed by bankruptcy, Specialty’s, the cafe chain where Ms. Cerros-Mercado began her career, was reincarnated. The first new store sits in the Silicon Valley town of Mountain View, and as the company plots its next expansion it is eschewing the office-adjacent locations on which the original company was built for a more delivery-centric business that has a world of half-empty buildings in mind.Back at 140 New Montgomery, the owners are experimenting with new ideas to get office workers to come in. The building has been hosting gatherings like an Oktoberfest celebration that included a raffle to win a beer stein with the building’s logo.On the afternoon of the Oktoberfest party, a cluster of workers from a software company stood around eating sausages and soft pretzels.“We hear a lot of buzz about this building,” said Veronica Arvizu, a senior property manager at the real estate company CBRE. “We hear it’s the busiest in the city.”A few feet away from her, another group of young workers was playing Jenga. One by one, they took blocks away from the structure, making way for the inevitable collapse. More

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    The Rent Revolution Is Coming

    Here’s a list of places you might imagine seeing an argument over housing policy. A city council meeting. A late-night zoning hearing. Maybe a ribbon-cutting to christen a new affordable housing complex.Instead, there was Quinton Lucas, the mayor of Kansas City, Mo., on a stage dressed as the pope with a half-dozen hecklers in yellow T-shirts berating his new housing plan from the audience in front of him. Mr. Lucas had arrived at the outdoor Starlight Theater on a warm August evening for a cameo appearance in a local production of “Sister Act.” Just before he walked onto the stage, the demonstrators, who belonged to a group called KC Tenants, unfurled a banner that read “Mayor Lucas: Developing Displacement.”A pack of uniformed security guards promptly smothered the scene. During the slow procession to the exit gates that followed, members of KC Tenants chanted, “The rent is too damn high!” while the audience tried to focus on the mayor/pope and the dancing nuns.Such is the state of housing in America, where rising costs are flaring into pockets of resistance and rage. Take two-plus years of pandemic-fueled eviction anxiety and spiking home prices, add a growing inflation problem that is being increasingly driven by rising rents, and throw in a long-run affordable housing shortage that cities seem powerless to solve. Add it up and the 44 million U.S. households who rent a home or apartment have many reasons to be unhappy.That unhappiness extends across the economic spectrum. At one end are renters who aspire to buy a home but have had their dreams dashed by high home prices and, now, rising mortgage rates. At the other are low-income tenants who make up the bulk of the 11 million households who spend more than half of their income on rent. In between is a hollowed-out middle class that is steadily losing ground, although not enough to qualify for much sympathy or help.The confluence of all these forces has fueled a swell of tenants’ rights activism that has brought organizing muscle and policies like rent control to cities far beyond the high-cost coasts. Kansas City, Mo., is a leading example. With a population of 500,000, where the avenues are lined with brick buildings and side streets have modest homes with raised porches, the city offers little to suggest a renters’ revolution. Zillow’s home value index puts the typical Kansas City home at $230,000, or more than $100,000 below the national level.But with a steadily expanding economy driven by the logistics and medical industries, Kansas City has seen its rents increase 8.5 percent from a year ago, outpacing the rest of the nation, according to rental search site Apartment List. Over the past decade, Kansas City, like many places, has added a collection of high-end towers and apartments even as its stock of low-income housing has withered. The strain from rising rents, which landlords say they need to cover their costs, is creeping from people working in low-income service professions to middle-income teachers and city workers, part of a festering affordable housing crunch that spreads more widely across the nation each month.KC Tenants is one result. Pairing aggressive protests with traditional lobbying, the group exploded onto the political scene during the pandemic and has since become instrumental in passing tenant-friendly laws like an ordinance that gives renters a lawyer during eviction proceedings. It has also left a trail of embittered opponents who find the group’s tactics, such as protesting outside judges’ homes, ill-suited to what many residents describe as a cordial Midwestern town.Organizers with KC Tenants protesting a new set of housing ordinances during a council meeting at City Hall.Barrett Emke for The New York Times“It’s a transition in politics for us,” said Mayor Lucas, a Democrat, who says he meets with the leaders of KC Tenants regularly, despite being a frequent subject of the group’s protests. “There is a new, almost tougher political edge, in the sense that there are people who are organizing and intrigued by politics and are very angry and are not coming out of the same institutions that built a lot of us.”America’s housing problem was simmering long before the pandemic, and tenant organizing is a well-established trade. What’s changed is the depth of the housing shortage and the suddenness with which Covid-19 and inflation have tipped smaller cities into an affordability crisis. This has opened the aperture for policies once deemed politically impossible, in a wider range of markets.Unlike homeowners, whose budget problems are blunted by a litany of tax breaks and fixed-rate mortgages, renters are mostly unprotected from rapidly rising prices. Once cities around the country passed widespread eviction moratoriums and emergency rent caps that were followed by tens of billions of dollars in pandemic rental assistance, it was only natural for housing activists to push for some of those temporary policies to be made permanent.Politically speaking, inflation has only helped. Nationally, rents are now 20 percent higher than they were in early 2020, creating an opportunity for renter-friendly laws to get baked into long-term policy.“People take for granted that rent is always going to go up,” said Tara Raghuveer, a co-founder of KC Tenants. “There’s so little political imagination about what could be different, and now I think that’s changing.”A hyper-focused worker who blends the rhetoric of a revolutionary with the efficiency of a chief executive, Ms. Raghuveer also directs the Homes Guarantee campaign, which works to create tenant unions around the country. She described KC Tenants as both a local movement and national experiment through which organizing ideas can be test-driven.“I think every national organizer should be accountable to a local base,” she said.During a three-day visit in which I hung around the office and shadowed meetings and protests, Ms. Raghuveer returned repeatedly to an idea that has become a refrain among tenant groups: the hope that growing resentment over housing costs is fostering a broad tenant identity that will inspire a wide range of renters to organize and vote with a shared interest. In the activist nomenclature, this is known as “tenants as a class.”That’s an audacious goal in a country where homeownership is all but defined as success. An irony of the nation’s housing problem is that it’s become so pervasive that it has created as many opportunities for cleavage as it has for coalition. Need has grown faster than resources, making housing policy a prism through which a stealth conflict between the middle class and the truly poor is filtered.Even so, what’s clear is that in Kansas City and elsewhere tenants are becoming a real constituency. That’s not something you could say as recently as a few years ago. But a few years ago the rent wasn’t quite so high.Getting the DataTara Raghuveer, KC Tenants’ founding director, working outside the East Patrol Division Station where the group camped out waiting for Board President Tiana Caldwell to be released on bond.Barrett Emke for The New York TimesKC Tenants began, more or less, as homework.Ms. Raghuveer, now 30, was in her final year at Harvard when she settled on a topic for her senior thesis: evictions, inspired by the work of Matthew Desmond, the Princeton sociologist and author of “Evicted,” the 2016 book that explored the housing struggles of low-income families in Milwaukee. She’d grown up in Mission Woods, a suburb on the Kansas side of the Kansas-Missouri border, and conducted her thesis research in the Kansas City metropolitan area.After college, Ms. Raghuveer was invited to talk about her thesis in policy forums, and that’s how she met the women who would help her start KC Tenants.One was Tiana Caldwell, whose husband contacted Ms. Raghuveer as the family bounced between hotels after being evicted from their apartment amid Ms. Caldwell’s treatment for ovarian cancer. Another was Diane Charity, a 72-year-old retiree who rents a two-bedroom townhouse and who met Ms. Raghuveer during a presentation at the local health department.“She gave all these stats and I said, ‘I need to talk to you,’” Ms. Charity said. “We’ve been telling these stories forever, and no one’s listening. But she had what it took — I’m sorry to say this, but to talk to white people and people in power, you got to have data.”KC Tenants was founded in 2019 by a group that included Ms. Charity and Ms. Caldwell. A local union allowed the group to work out of its offices, and a folding table there formed KC Tenants’ first headquarters. That’s where Ms. Raghuveer was working when the Covid-19 pandemic erupted.‘Shut it down’For all the uncertainty that the pandemic wreaked on markets and the economy, there seemed to be at least one prediction that housing experts and policymakers agreed on in its early days: a “tsunami of evictions” was imminent.Nearly three years later, that prediction has yet to materialize. The economic recovery from the immediate shock of Covid was faster than many expected, and in the meantime trillions of dollars in federal stimulus spending and eviction moratoriums helped plug the gaps. Still, the attention that Covid brought to housing insecurity is poised to be a lasting remnant of the pandemic economy, even after rental assistance wanes and the patchwork of moratoriums expire.It shows up in cities like Los Angeles, where the City Council this month voted to expand tenant protections for renters in the same meeting that it voted to end its Covid-related eviction moratorium. Last year, voters in St. Paul, Minn., passed a new rent control ordinance. The uneven rollout of federal rental aid, in which bureaucratic hurdles frequently prevented cities and states from getting money to tenants, inspired a number of cities to experiment with cash assistance programs that are now becoming a permanent feature of the policy landscape.For organizers, the pandemic provided an almost perfect opportunity to build their ranks. Here was a crisis that affected large swaths of renters pretty much all at once, in contrast to the normal state of affairs in which tenants who are falling behind or evicted are dealing with problems that seem unique to their lives and mostly handled in private. “Embedded in tenant organizing are deeper questions about the structure of our political economy,” said Jamila Michener, a professor of government and public policy at Cornell who has studied tenant organizations. “It’s getting people to think about not just how you can leverage power against your landlord or get the city council to help you, but also questions like: Why does the economy seem to be rigged against people like you so systematically?”In 2019, Jenay Manley was making $11.50 an hour at a QuikTrip gas station when a paperwork error cost her a voucher that covered a portion of her rent through the federal Section 8 housing program. To help make up for the loss, she allowed a former boyfriend who she said was abusive to move back in. One night, she texted a friend who had been displaced by a rent hike to ask what she could do. The friend, Maya Neal, suggested that she go to a KC Tenants meeting. There, she heard Ms. Caldwell tell her story of being evicted during cancer treatment.Maya NealBarrett Emke for The New York Times“It was just this clarifying moment of, We’re not OK. People are not OK,” she said. “We are struggling, and no one knows. And the more of us who tell our story, the more of us realize our story is worth being told.”A few months later, after leaving the night shift at QuikTrip, Ms. Manley, along with her sister and three children, stationed herself along Interstate 70, next to a minivan with “#CancelRent” scrawled across a window in purple marker. She was there to protest the burden of Covid on tenants in a socially distant manner.In July 2020, KC Tenants protested the end of a local eviction moratorium and tried to halt eviction proceedings by logging onto virtual court hearings and continuously reading a script — “Every eviction is an act of violence” — so that judges and lawyers couldn’t hear one another. By October, the group’s members were chaining themselves to the courthouse doors.They also started targeting lawyers and public officials, including through a rally in the front yard of Judge J. Dale Youngs, who oversees the circuit court in Jackson County. Mr. Youngs said in an interview that at one point the group spray-painted “FU” onto a flagstone path in his yard. He added that he did not know if “FU” was the completed thought or if the vandal was interrupted before the message could be finished.“I’m a pretty big supporter of the First Amendment, and I’m the first to admit democracy is messy,” Judge Youngs said. “But when you go protest in front of someone’s private home, I think the only reason you’re doing that is to let them know that you know where they live. And there’s something kind of inherently not cool about that.”Locals argue over how effective these protests were, but there’s little doubt that housing pressures brought on by Covid helped open the door to policies that otherwise would never have happened. The biggest, by far, is a new right-to-counsel ordinance in which the city will pay for a lawyer to represent any tenant facing eviction. The measure was drafted by KC Tenants, according to Andrea Bough, the City Council member who introduced it.In an interview in her office, Ms. Bough expressed the same anxiety I had heard all around town, including from the mayor and from low-income tenants: even though Kansas City remains inexpensive compared with larger cities, it is spiraling into the same affordability problems as those places and is no more equipped to solve them.“We aren’t to the point of a widespread housing crisis, but if we don’t do something we’re going to get there,” she said.The right-to-counsel law, which went into effect this year, has already changed the landscape. Julie Anderson, a Kansas City attorney who represents a number of local landlords, said that the cost of an eviction had risen by a factor of five and that the process now took from three months to a year, up from a month or so. Her clients are unhappy, but it’s also been good for business: Ms. Anderson said she had hired two lawyers and three paralegals to handle the extra work.“That part of my practice was very uneventful,” she said. “Now, post-Covid, almost everything is contested.”The Tenant ClassBarrett Emke for The New York TimesKC Tenants now has 4,300 members, seven full-time employees and piles of yellow T-shirts ready for distribution. The nonprofit organization operates out of a second-floor office inside a Methodist church, and is funded through a mix of individual donors and foundations. It has a $450,000 annual budget.This month, members launched a separate entity, KC Tenants Power, that is registered as a 501(c)(4) and has more leeway to engage directly in politics. Like everyone else these days, Ms. Raghuveer seems to spend most of her time on video calls, talking in front of a banner that reads, “Eviction Kills.”Tenant-organizing has been central to any number of social justice and civil rights movements stretching from the turn of the twentieth century, but, in recent decades, it has rarely been successful outside localized pockets. An enduring issue in organizing tenants as a class is that homeownership is still most families’ goal.Covid has illustrated this. Once remote workers could live anywhere they wanted, many renters left big, expensive markets for smaller cities where they could afford a home.Ms. Raghuveer believes in a growing tenant identity, but she has no delusions. She doesn’t imagine that one day she’ll lead a protest march in which public-housing tenants lock arms with residents of luxe buildings, where one-bedrooms start at $3,000 a month and include access to rooftop pools and private dog parks. What she does believe is that housing instability, however it is experienced, can be a catalyst for a broader coalition that operates across traditional political lines.She pointed to a recent effort to help a local trailer park where the county was evicting residents in order to build a jail on the property. This would normally have been an organizing no-brainer. However, during a meeting, several members of KC Tenants said they were reluctant to get involved because a number of the cars and trailers in the park had Trump stickers and flags on them. Other members responded by recalling that the group’s community agreements, which they read before every meeting, declare that KC Tenants does not make assumptions about anyone.So a group went to knock on doors.“This little skinny gal comes to my door, and I’m like, ‘Who in the hell is this?’” said Urban Schaefer, a resident of the park who helped organize it after meeting Ms. Raghuveer. “A lot of people were skeptical about it.”In the end, about a dozen members of KC Tenants worked with residents to demand a better deal. And the county sweetened its offer: six months of free rent and at least $10,000 in relocation costs.Inventing HopeAn organizing meeting for tenants Gabriel Tower Apartments, in Kansas City.Barrett Emke for The New York TimesThere weren’t any MAGA hats at the KC Tenants meetings I went to, but it was a generally diverse group with a range of motivations for being there. There were Black women, who are among the people most affected by eviction, both locally and nationally. There were white men, who began whatever they were about to say with acknowledgments of privilege. And there was a child of the housing bust, whose faith in the American dream was shattered when his family was foreclosed on and a chain of moves followed.During a meeting of a tenants’ union in the gentrifying Midtown neighborhood, I met an economics professor who had come because she had wanted to better understand the housing problem. Later, at meeting in a Section 8 building on the other side of Troost Avenue — long the city’s dividing line between its Black and white residents — several attendees sat in wheelchairs, and one said he’d recently slept under a bridge.Small frictions abound. At one recent meeting, a young man talked about the “carceral state,” only to have Ms. Charity reply: “Are you talking about jail?”This diversity is, unintentionally, the policy conundrum that Mayor Lucas and other officials are grappling with as more people look to the government for help with housing.Around the country, developers have spent the past decade building mostly higher-end units. Eli Ungar, the founder of Mac Properties, which is based in Englewood, N.J., and owns about 9,000 apartments, including 2,000 in Kansas City, bluntly laid out the economics. The cost of development is now so high that the most reliable way to make money is by building apartments for tenants who regard the cost of rent as “a matter of curiosity.”This leaves two groups behind.“The folks who think of themselves as middle class and are feeling increased worry and pressure as rents go up faster than incomes, and the people who are most vulnerable in our society and desperately need housing that no developer can provide without a massive subsidy,” Mr. Ungar said. “As a citizen, I would be entirely comfortable with my taxes being higher to provide well-maintained housing for those who can’t afford it. The question is how that is achieved, and market-rate developers are not unilaterally going to say, ‘I will reduce my income to achieve this goal.’”Caught in the teeth of a housing problem that is growing faster than local budgets, public officials inevitably try to solve both problems at once, pitting the middle class against families who live on minimum wage or fixed incomes. This was the crux of the “Sister Act” protest.Mayor Quinton Lucas, in Kansas City, last year.Chase Castor for The New York TimesAs part of a new housing plan, Mayor Lucas had proposed a $50 million bond issue to fund low-income housing, but at the same time he wanted to loosen the city’s regulations for apartment projects that receive tax breaks through a program designed to create affordable housing in market-rate projects. The shift would allow developers to substitute middle-income units for those reserved for families in the lowest income brackets.KC Tenants framed the change as selling out families closest to the edge. The mayor’s retort was that the previous iteration of the program had resulted in no new units for anyone, and his hope was that the revisions would push developers to build middle-income housing, which the city needs as well.In the interview, he cast himself as a leader trying to navigate a difficult problem in world of limited resources.“We don’t have a Scandinavian tax structure,” he said. “Maybe we can get to it, but I don’t know that it starts in Kansas City.”Two days after the “Sister Act” protest, when the City Council held its vote on the plan, the chambers were packed with yellow T-shirts. After a 9-to-4 vote in favor of the new policy, Ms. Neal, an early KC Tenants member, yelled, “How dare you!” Security hauled her out with her arms behind her back in a scene that members’ cellphones captured from every conceivable angle.Ms. Neal being escorted out of the council meeting at City Hall.Barrett Emke for The New York TimesWhen Ms. Neal was gone, Ms. Caldwell, the once-evicted tenant whose cancer is now in remission, continued the chant. “Not another penny for the slumlords!” she shouted. She was removed just as fast, only instead of getting booted to an outdoor bench, like the one where Ms. Neal sat after she’d left the building, Ms. Caldwell was arrested and taken to a local police station.An hour later, the lawn outside the station was crowded with yellow shirts. Members of KC Tenants lay on the grass typing on laptops and eating pizza. A slice was waiting for Ms. Caldwell when she emerged a short time later to cheers.“I’m feeling great,” she said to the crowd, as her 15-year-old son joined her. “I’m doing this so that my baby will never have to.”After a chant of “Tiana, we got your back!” a small group that included Ms. Caldwell and Ms. Raghuveer went to a wine bar to relax. The bar was closing, but Ms. Raghuveer said she’d called the owner, who’d promised to keep it open for them. She added that he was a renter. More