What I’m Reading
Mean Reversion: Americans have returned to their pre-pandemic consumption habits with spending on gyms, concerts and recreational travel up substantially. At the same time, pandemic darlings like Peloton, Netflix and Instacart have underperformed. Wall Street Journal My take: a lot of this is mean reversion. Americans were always going to have pent up demand for the services and experiences that they missed during the pandemic. At the same time, businesses that benefited from the pandemic made operating assumptions that trees would grow to the proverbial sky. Once the excess is worked off, growth of convenience-adding delivery and streaming services will return to their pre-pandemic trend.
Under Pressure: After a rebound last year, small businesses are struggling to make rent once again. Survey data from Alignable found that 34% of small retail businesses couldn’t make rent in April, up six percentage points from February. Those surveyed cited inflation, including gas price spikes, supply chain issues, labor shortages, reduced revenues and increasing rent. Retail Dive
Cutting Back: VC backed startups are beginning to lay off employees as valuations tumble and the venture capital gravy train slows. Axios
Running on Empty: About half of the $46 billion of emergency rental aid from Congress has been spent. Some harder hit areas have run out of their share of money and shutting down. This is sending eviction filings back to near pre-pandemic levels as inflation takes a toll on household budgets. NPR
Capped: Supply constraints have held back production of both houses and cars, keeping the market from reacting to record demand and sending prices skyward. Bonddad Blog
Chart of the Day
This seems rather bad as we head into a tightening cycle.
Source: Michael Arouet
WTF
Fake it Till You Make It: A 44-year-old Torrance, California, man pleaded guilty Monday to running a real estate scam, which included holding open houses at homes he didn’t own and selling with forged documents. The scheme reportedly bilked more than $6 million from several hundred victims. (h/t Nicole Deermount) LA Business First
Fight Club: A man who was arrested for drug trafficking told police that his name was Tyler Durden because Florida. The Smoking Gun
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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