Worried about Costs & Slowdown? Amazon Scuttles HQ2 Altogether, Plunges NY City Real Estate Industry “Into Despair”

Prudent cost-cutting move artfully dressed up as response to local politicians that had railed against the $3-billion corporate welfare package.

Amazon scuttled plans to build its HQ2 in New York City today, citing opposition by some “state and local politicians.” They’d been railing against the $3-billion taxpayer-funded price tag to induce Amazon to set up shop in Long Island City, Queens. The incentives included tax credits and an outright capital grant.

A week ago — even as one of the richest companies in the world run by the richest man in the world was still being promised the $3-billion incentive package — New York City Mayor Bill de Blasio, citing a shortfall of $1 billion in revenues, told city agencies to cut their budgets by $750 million by April. These cuts would have to be recurring. And he called for an expansion of a partial hiring freeze. This squeeze didn’t exactly mollify the outrage over the $3-billion corporate welfare program for Amazon.

There wouldn’t have been much opposition to Amazon’s expanding its presence in New York City on its own, without taxpayer-funded incentives. In the blog post that announced the decision, Amazon said that it already has over 5,000 employees in Brooklyn, Manhattan, and Staten Island, “and we plan to continue growing these teams.” Why not do that from get-go – without the taxpayer wealth transfer?

A cost cutting move as the future becomes murky?

Amazon also announced that it had scrapped the idea of building any HQ2 at all and won’t reopen the bidding process to find a different location. In the second-to-last paragraph of its blog post, it says: “We do not intend to reopen the HQ2 search at this time.” It’s off the table.

This means that Amazon has decided it didn’t really need this big facility. Is it worried about retail sales not holding up? Is it fretting about competition from the biggest retailers in the US and elsewhere as they catch the drift of e-commerce? Is it worried about a slowdown at AWS, its big data-center money maker, now that the exuberance about the “cloud” is waning? Is it worried that in the future, investors will once again hound it about ballooning expenses, and hammer its stock price to smithereens?

This was a move designed to keep operating expenses and capital expenditures from ballooning further. Laying off people is one thing when push comes to shove, but getting rid of a monstrous multi-billion-dollar HQ2 is another. Something like this — especially when work has already started and money has been plowed into it but it’s not finished and cannot be used – could become an albatross around the neck of Amazon when it needs to cut expenses.

Interestingly, its project in the Washington D.C. area – in Northern Virginia, a hotbed for government contractors – is moving forward to allow AWS to feed at the big trough of the government, which is, as everyone has learned last time, great-recession-proof.

Real estate industry falls into despair

Beyond the jubilation among the “state and local politicians” and the activists that had opposed the $3 billion incentive package, there was the real estate industry – one of the primary beneficiaries of the HQ2 project, the construction activity, the influx of the 25,000 Amazon employees that all would need to find housing, etc. From one minute to the next, the industry’s once-in-a-career grand price was yanked off the table.

Forget soaring rents for apartments, forget higher home prices, and surging rents for office and industrial space, forget booming commissions. That whole dream went up in smoke today – in a market that has already come under pressure.

Here are some choice tidbits from Bloomberg about Amazon’s announcement that “plunged local real estate brokers into despair”:

The sign displayed in the storefront of a Douglas Elliman brokerage in Long Island City summed up the real estate industry’s attitude toward the controversial deal. “This business supports Amazon,” it read. Someone inside pulled the sign down after the company released a statement Thursday that it was pulling out.

“I was sitting down, so I had nowhere to fall,” said Adrian Lupo, manager of Nest Seekers International nearby on Vernon Boulevard. “We thought they were playing poker to get more concessions, but in the end it was not the case.”

Amazon’s withdrawal “sends a terrible signal to the marketplace about the ability for companies to expand in New York,” said Seth Pinsky, an executive vice president at RXR Realty.

“What happened today is a real tragedy,” said Jason Haber, a broker with Warburg Realty Partnership Ltd. He said at least 10 clients have already called to discuss what Amazon’s absence from Long Island City means for them. He said he hopes none of them back out of deals over the news, but “real estate is an emotional thing.”

“This definitely sets back the commercial market for Long Island City for sure,” said Chad Sinsheimer, a managing director at Ackman-Ziff Real Estate Group. He was on the subway when he heard the news. “My partner and I looked at each other and we said, ‘Boy are we glad we don’t have anything that’s being negotiated in Long Island City right now because it’s got to be chaos.”’

It hurts when all the hopes and hype surrounding Amazon’s HQ2 and its corporate welfare package suddenly just vanish.

But for Amazon, it may have been a prudent business decision, artfully dressed up as response to the political opposition the incentive package was facing.

Its decision to scrap HQ2 altogether may have been based on the growing uncertainty in the financial markets, on the increasing likelihood of a downturn looming just beyond the horizon, and on the stiffened resistance by its competitors around the globe.

It’s shares, despite the blistering stock market rally since Christmas Eve, are still down nearly 20% from the peak at the end of August. And not going overboard building the next palace might have been a smart cost-focused move.

Consumer exuberance maxed out last summer and has since changed direction. Read…  Why I’m Not in Panic Just Yet over the “Dreadful” Retail Sales that “Fell Most Since 2009,” But Nervously Look at the Trend

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  142 comments for “Worried about Costs & Slowdown? Amazon Scuttles HQ2 Altogether, Plunges NY City Real Estate Industry “Into Despair”

  1. Iamafan says:

    I could never figure out what Amazon’s real plan for LIC was. I can understand a need for warehousing, trucking, airport logistics, etc.; but to do that massively across the East River, maybe not too sound. What were they planning to do there?

    The rent for condos in LIC waterfront is already beyond many New Yorkers, so I’m not sure what they are thinking.

    • Nik says:

      Its easy and very simple to know what they were thinking……like NFL owners of old,they wanted to build it for FREE on the back of Taxpayers…lololol

    • andy says:

      I still can’t figure out what people buy from Amazon.

      • California Bob says:

        “I still can’t figure out what people buy from Amazon.”

        Often, but not always, the best price. Seamless ordering. Free shipping, if you finagle it right. No disputes on returns.

        Over the holidays and through January, Amazon had a free shipping on EVERYTHING offer. So, I ordered a couple dozen cheap–between a couple bucks and $20–items individually and got free shipping. I figured, with free shipping, it actually COST Amazon money to send me these items, and I could, if I ordered enough, bankrupt Amazon. Apparently, my sinister plan didn’t work, but it was worth a try.

        • Old Engineer says:

          Amazon doesn’t like to work with my VPN so I’ve gone to specialty sites for almost everything. Their prices are generally as good as Amazon’s and a lot have free shipping. JC Penneys also won’t work with the VPN but otherwise I haven’t found a commerce site that doesn’t. I still go to Amazon for books since B&N won’t take my discount card online for some reason but otherwise I use Amazon for fewer purchases than I used to and don’t miss them.

      • Javert Chip says:

        Seriously Andy?

        Ok, I’ll play 1 round of your game: What people buy from Amazon:

        Everything; hundreds of millions of people buy everything from Amazon. In fact, I bet you do, too.

      • fajensen says:

        The Amazon AWS cloud is very, very good. Maybe a decade ahead of the competition, such as it is. Scores of competent open-source developers write tools for AWS, boosting them.

        Microsoft is probably the other possible contender in that game. Microsoft cloud is more “corporate” and does not have the same pull with the tool-smiths as AWS.

        Google is tainted by trust issues over all their data snarfing and of course all the services they create, hype and then shoot out from under the users of said service.

        • intosh says:

          Speaking of Cloud, I’m surprised Wolf says “that the exuberance about the “cloud” is waning”.

          Would like to know why he is saying that because this is not what I’m seeing “on the field”.

        • Wolf Richter says:

          Check the earnings warnings and lowered guidance by the chip makers and others that supply the data-center hardware on which the cloud runs.

        • Justme says:

          >>Maybe a decade ahead of the competition,

          Ad decade?? Absolutely no way. Cloud is rapidly being commoditized. The command line interfaces are very similar. Any open source tool can quickly be adapted to any mainstream cloud provider.

        • intosh says:

          “Check the earnings warnings and lowered guidance by the chip makers and others that supply the data-center hardware on which the cloud runs.”

          This is could just mean over provisioned capacity for the short term. Migration to the cloud is often a lengthy project/process with companies. Cloud providers may have simply anticipated the migrations (which are becoming true) but the actual full deployments to production are lagging, which is normal.

          Also, this could mean the cloud providers’ own first-party services (e.g. Microsoft’s Office 365, Google’s Youtube) are not expanding as fast. But this doesn’t necessarily mean interest of customers migrating to the cloud is waning.

      • zoomev says:

        A Ford Traction-Lok differential 45lbs+ plus bearings and races for $265 delivered in 2 days free shipping … “what people buy from Amazon” … everything.

        • Paulo says:

          I once signed up for Prime for the free shipping they kept pushing,and pushing, and pushing it. I then ordered a new shop dust extractor and some other big big wood shop power tools. (Planer? I forget the details). Anyway, after everything proved just fine with no operating problems I canceled Prime and got my money back.

          I usually buy direct from store sites as Amazon doesn’t offer what I need at their price. I never mind paying the shipping because what I buy cannot be found within 200 miles of my home and even a trip to the nearest town costs $30 fuel return in a Toyota Yaris. Canada Post shipping costs are very reasonable, the mail lady is a friend, and it is delivered to my house. Online is awesome if you know what you need. And if you don’t need something, why shop?

        • QQQBall says:

          You bought a differential from AMZN? That is crazy!

        • California Bob says:

          “A Ford Traction-Lok differential 45lbs+ plus bearings and races for $265 delivered in 2 days free shipping … “what people buy from Amazon” … everything.”

          Shoulda bought a half-dozen. Clutch pack LSDs wear out pretty quickly (presume that’s why you bought this one).

      • RD Blakeslee says:

        I buy practically anything which cannot be conveniently bought in a local store.

      • Bobber says:

        I hope you are joking. Most people could give you a long list of their purchases.

        • andy says:

          Long list of purchases. Everyone buys everything and anything from Amazon. Got it.
          So economy is doing great as opposed to what Wolf is reporting.

      • Toronto Man says:

        One of my roommates has bought pretty much many things from Amazon almost every week. LOL He even has bought drinking water packed inside a big box from Amazon and the box is very heavy… LOL Most of my roommates don’t have car and they are in 20s and mid 30s. So order things from Amazon including drinking water by paying no shipping fees is good deal for them. They don’t need to carry heavy boxes of drinking water while riding in a bus or walking back from the supermarket.

  2. TrojanMan says:

    Wolf, remember I mentioned in another thread that I went to an open house for a small two bedroom condo listed at $1.6 million. It went pending in 14 days.

    Whoever bought sure as hell isn’t worried about retail!

    • Wolf Richter says:

      The unit you linked (link removed):

      listed for sale on 01/31/2019 for $1,595,000; now sale is pending at unknown price

      last sold on 04/28/2015 at 1,550,000

      So if the unit sold at asking, it gained 45K (2.9%) over a 2-year period. 6% broker commissions amounts to $93K; and the seller is in the hole by 48K

      • TrojanMan says:

        I agree. Definitely some softening. But still the place went pending very quickly at a similar advertised price point. I would not be shocked if offer comes in over asking.

        I’m still sitting right for a while but just pointing out how frothy SF remains because people here have $$$. Would take a persistent job loss crisis to tank the market IMO.

      • California Bob says:

        “… 6% broker commissions …”

        Anybody paying 6% broker commissions on RE sales is a fool. I sold my SJ house for 3%–agent handled me and the buyer–and even the ‘big name’–‘AP’–agency offered to do it for 5%.

        • Paulo says:

          There should be a max commision, not percentage. It costs the same to market a 10.5 million dollar detached as it does a $400,000 condo. Why any sale is worth 98K is the reason RE agents are viewed with great suspicion. In short, in my opinion it is BS.

          There are commercials by the hour attacking Investor Fees, but somone can make 100 K for one sale?

          In BC they finally outlawed agents being able to work for both seller and purchaser as middlemen/women. Now, each side has to have their own representation. It has caused problems, but at least you know the agent is focused on your needs and not playing a negotiating Godfather…with the biggest cut possible. Sure, many agents did an admirable job under the old system, but a few sure do make a lot of money. It is also always folded in and financed. If people think the seller actually pays the commision, why I’ve got a bridge for sale right after I ‘pay’ the taxes on my rental.

          I am in the process of preliminary dickering on some property. When the time comes we will pay an agent for a formal market appraisal, upfront. I believe it is important and honest to let the agent know right up front it is a private sale and pay fairly for their time and knowledge. If the # is agreeable for us it will form the basis of our agreement. I’ve done it before and the agent has always been amenable as they know they won’t be getting the ‘sale’, anyway.

          Even in divorce settlements an appraiser does something similar.

          And yes, I accept and agree this isn’t NYC, Dorothy.

        • Les Wood says:

          Buyer pays for everything. Seller gets what’s left.

        • California Bob says:

          I don’t see your point, Paulo. The seller’s RE agent/broker’s incentive is to get the best price–or possibly, most convenient transaction–for the seller. In the US–in California at least–the seller pays his/her commission (this was all spelled out clearly in the ‘closing’ document). The buyer’s broker’s incentive is to get the sale done, arguably at the highest price, but the decision of what to pay is entirely up to the buyer (aka ‘capitalism’). Could the buyer’s broker exert undue pressure on the buyer to ‘pay up?’ Sure, that pressure is there for almost every purchase someone makes (relentless drug advertising, anybody?).

          My broker realized early on that RE is changing. The ‘old school’ agency, with fancy offices and lots of other overhead, offered the traditional fancy, printed brochures, ugly signs on my front lawn, etc. My broker used social media exclusively; the buyers he ‘found’ had a search set up on Zillow so were informed immediately when my house went on the market, and it met all their criteria. We had over 10 potential buyers lined up; the most enthusiastic made an offer the day after we listed. He backed out of the contract, having second thoughts, and my agent got a small ‘penalty’ payment from him. The second-in-line buyer went through with the purchase. My broker suggested an ‘open house,’ as my house presented fairly well, but the offer was as good as I’d hoped–and higher than what a larger house had just sold for down the street–so I eschewed having a bunch of strangers wandering my house and belongings and took that offer.

          ‘Old School’ RE brokers are going to become extinct in a few years.

        • David G LA says:

          “The seller’s RE agent/broker’s incentive is to get the best price“

          Not really. They just want the sale to go through. If it’s selling at 1,000,000 or 900,000 – the agent still makes a huge wad of cash either way. The agent is motivated to make .03 * 900,000 way more than .03 of no sale at all. The seller’s agent does NOT have an incentive to get the best price.

  3. andy says:

    HQ2? Wouldn’t the money be better spent building a flying saucer type structure, a la Apple? Or tallest tower like Salesforce?

    • GuiriCateto says:

      Tents were good enough for Tesla, and Musk’s even got rockets.

      Think about it:

      ===== Camp Amazon=====

      “We deliver what you want to spare you having to visit”

  4. Lou Mannheim says:

    “Forget soaring rents for apartments and spiking cap rates”

    You mean plummeting cap rates, no?

  5. timbers says:

    “I’m sorry, Jeff, but I’m afraid I can’t do that. This project is too important for me to allow you to derail it.”

    Alexa as HAL 9000 telling Bezos why he has to give up NYC to preserve the Metro DC office.

    Amazon HQ2 was always, and only, about maximizing it’s plug in to political access. That’s why so many said from the get go it would be DC – and only DC – that gets built.

    • sadman says:

      I knew from day one it would be DC. The only thing that surprised me was this “HQ2b” thing in New York, I still don’t understand what the motivation for this was.

      • Smoke? If it was only ever DC it might look like their huge government contacts were compensation for their CIA-written Washington Post articles.

        • Escierto says:

          Well it has to balance out the KGB written material spouted on the False News Network every day.

    • Suzie Alcatrez says:

      Both new HDQs were extremely close to Bezos’ residences.

  6. Michele says:

    Whatever the motivation, it’s a loss for NYC. 25k jobs, 100k average salary, lost taxes, untold lost knock-on effects. Thank You AOC!

    • timbers says:

      Um yah, like Google in SF. I’m sure the locals are really upset at AOC for helping keep their neighborhood affordable and livable. So why not open HQ2 in Detroit, or Kansas, or Illinois?

      • Endeavor says:

        Detroit would be the ultimate virtual signal for Amazon to come true. Here in Michigan we provide ongoing subsidies for big corporations year after year even as they are cutting employees and offshoring jobs. Amazon would be hard pressed to find a cheaper location.

    • polistra says:

      A loss for NYC is a gain for humanity.

    • fajensen says:

      Don’t forget the -3 Billion loss for the taxpayers (the NYC does not have)

    • intosh says:

      “25k jobs, 100k average salary…”

      Average salary when Jeff is in town: $100k.
      After he left: $23k

      • Mike B says:


        So true, so very very true. Good luck explaining that mathematical fact to the great unwashed however. Aint’ averages grand?

        • Jm says:

          Haven’t you noticed that whenever the mainstream
          media talks about incomes they always use median income, not average, because inequality is so great that average is about twice median, and the corporate masters would prefer the masses don’t get wind of that. Of course I even average income doesn’t fully reflect the inequality, because the enormous capital gains handed to the rich by the Fed’s QE campaigns never become income as long as the asset holders don’t sell. Even if they happen to need spending money, they can borrow against the assets and still come out ahead — still no taxable income.

    • Michael Fiorillo says:

      No jobs have been “lost,” – Amazon is still expanding employment in NYC – and LIC has been the hottest deal estate/development market in the country for years, long before Bezos started his urban Hunger Games competition.

      Transplant the skyscraper construction in LIC over the past five years to a second-tier US city, and it would be equivalent to an entirely new central business district.

      Props to AOC and local politicians for standing up to this gross example of corporate welfare.

    • Prairies says:

      Lost taxes? Like the 3 Billion from taxpayers in the first place, to a company that hides the gains off shore. Ya, lost taxes /sarc

  7. MCH says:

    Another victory for the progressives against the elites. AOC and the young people should be proud of how they stood up to the bullies from Seattle. Except, there is this funny thing that I remember from way back. These particular young people reminds me of another batch of “young people” who were rocking the boat, attacking the elites in the 50s through the 70s.

    These people of course were full of their own ideological righteousness and they were supported by a powerful leader at the time too. Oddly, they thought of themselves as socialists too, in fact they had a fancy name… literally translated into the red guard. In reality, they were nothing but a bunch of ignorant bullies who were egged on by a degenerate designed to purge his opposition and make people forget about their troubles.

    Personally, I am glad Amazon pulled out, in part because they didn’t need the subsidies anyway. But choosing to cheer their opposition feels just a little too much like cheering for the thugs of Mao.

    • timbers says:

      You’re right. Bezos has more $ than God and political pull than Jesus. How dare s tiny young woman who couldn’t afford an apartment bully poor helpless elites like him!

      • MCH says:

        Yeah sure… poor little ol’ AOC… you know, that’s what the older folks in China said about those psychotic little Red Guards too, poor little them, what could they know, what could they do. Then, they found out.

        Thanks to them, China had an entire f’ing lost generation. It took more than three decades to recover from that fiasco.

        But that’s ok, poor little tiny woman who is just your perfect political narrative comes along, and is bullet proof in this society because she’s latino, woman, etc… all of those things that are “protected” and needs to be “promoted” so there is “diversity” Hey, aren’t we all lucky.

        • Michael Fiorillo says:

          You really need to bone up on your history.

          And while your at it, look up what a false analogy is.

        • timbers says:

          Michael Fiorillo said:

          “You really need to bone up on your history. And while your at it, look up what a false analogy is.”

          No Micheal, MCH got it right. AOC and Chairman Moa both where red.

          Didn’t you notice?

      • nearlynapping says:

        “Tiny young woman who couldn’t afford an apartment bully poor helpless elites like him!”

        Talk about using false framing. Not a good substitute for reasoned discussion.

        • timbers says:

          What’s false about point out the exactly too the point class differences between someone richer than God who gets a tax payer funded helio pad to commute to work at our expense, being portrayed as “victimized” by someone who can’t afford rent?

          Please do explain more about that…and dig your hole deeper, my friend.

    • Bobber says:

      Let me get this straight. You are saying the New York locals are thugs of MOA because they don’t want their area gentrified and they don’t want Amazon to avoid taxes that all other businesses have to pay?

      • IdahoPotato says:

        Talking of taxes, for two years in a row, Amazon, a $1tn company has received a tax credit. Its effective tax rate is -1%.

    • Hobbes says:

      If you really think AOC tweeting about this stopped a business from moving into somewhere that isn’t even her district, then if I were you I’d be very afraid what she tweets next. I mean what would happen if she tweeted she didn’t like guns now!

  8. C says:

    Amazon seems to be in multiple projects — and not afraid to fall back on a Plan B. Remember the Amazon phone? Yeah, me neither. But Amazon wasn’t afraid to abandon it for other projects, and now Alexa is in your house, collecting information. Then there’s the internet sales tax. Amazon fought it, failed — and is now setting up warehouses and buildings in these very same states to further expand its market. Amazon is almost the Google of business processes and logistics. Wonder if there’s an HQ3 in the works!

    • MCH says:

      King Jeff probably has multiple backups in the work. The path for these HQs were laid out years ago, and they probably served as nice shiny objects to attract the attention of the media. While the rest of things are moving along quietly until it gets sprung on people. Alexa was kind of a sleeper hit year one from what I remember.

  9. Willy2 says:

    – Why do people blame AOC (Alexandria Ocasio-Cortez) ? I assume Amazon has done the math again and didn’t like the outcome. Seems that the (dramatic) Retail sales were just bad enough to make Amazon change its mind.
    – I am glad that the taxpayers of New York won’t get fleeced by Amazon. There are enough other things to worry about. Like e.g. the dramatic tax code changes implemented by the Trump administration.

    • KPL says:

      Forget anyone blaming AOC, AOC is taking credit for it herself even though Amazon might have done it for its own reasons.

      • RD Blakeslee says:

        Wolf Made that point, two lines into this article: “Prudent cost-cutting move artfully dressed up as response to local politicians…”

    • Jos Oskam says:

      People do not blame AOC , on the contrary. She herself is mouthing off all over Twitter how proud she is that she has helped chasing Amazon and Bezos out of New York.

      • Hobbes says:

        Perhaps you should check twitter before making comments about it. I don’t see anything in her feed saying this.

  10. Setarcos says:

    Bezos has been distracted and it shows….surprised and/or overwhelmed by pol’s who apparently think the $3B in tax subsidies is $$$ just sitting around that can be redirected to spending for other projects. You can’t make this stuff up.

    • Suzie Alcatrez says:

      Bezos has been very busy with the neighbors wife.

      • MC01 says:

        I think lately he’s been somewhat busier with lawyers of the very expensive kind: apparently there was no pre-nuptial.

        • Paulo says:

          Why would there be a pre-nup? She supported and helped Bezos build the business from the first idea, onward. She owns 1/2 to the day of separation. Or, maybe more if he has been hiding assets and playing secrets. Which judging by his behaviour……

          Wow, these rich and famous screw-arounds always pay a lot for their extra curricular affairs, don’t they? Consequences.


      • Dan says:

        Paulo: “She supported and helped Bezos “Why would there be a pre-nup? She supported and helped Bezos build the business from the first idea, onward. She owns 1/2 to the day of separation.”

        Coma again? a $70 Billion dollar support? Are you kidding me? Support him, how? By wearing makeup and dresses that his money paid for it? Despite the fact that I can’t stand Bezos, and everyone knows most of that money was earned on the back of tax payers, but he is the one who has earned it. That’s a really ignorant statement.

  11. Art says:


    • Paulo says:

      She. Owns. Half. Just like my wife owns half of what we have even though I made more money than her and did all the renovations over the years. A marriage is a partnership through both good times and bad. If he had lost his shirt she would own 1/2 the losses.

  12. OutLookingIn says:

    Throwing stones all around the pond, but none are hitting the water, except for Wolf’s touching on it. Its the economy. Plain and simple. Amazon execs have up to date sales stats. They know whats going on and whats coming at them. An imminent globally, deep recession.

    This is a smart move by Amazon, backing out of this albatross of a decision. It would have been a bottomless money pit for them, just when the global economy is rolling over into a deep recession. The Amazon C-suit know they must pull in their financial horns and conserve liquidity.

    If one just spends the time and sifts through the global fundamental financial/economic details, both micro and macro, you will plainly see what is staring all of us in the face. The recession is already here.
    Some will keep their heads in sand. Some will wait and see. Some will pay heed and win. Don’t be a loser. Its the fundamentals.

    • Michele says:

      But they are proceeding with the DC/VA and Nashville sites so how bad can it be?

      • OutLookingIn says:

        Perform some international financial/economic sleuthing. Concentrate on the flows. Trade, finance, etc. Now add in some macro/political maneuvering that has spin-off effects that impact the global economy.

        After gathering such evidence, it will be easy for anyone to arrive at an; “Ah ha!” moment themselves.
        “So how bad can it be?”
        The coming deep global recession, will make 2008 look like a blip on the economic radar. It will be bad.

        • Bobber says:

          It’s not that complicated. All you have to do is review asset price levels relative to history. Everything is way overpriced right now and ready to fall at some point.

          If the fiscal and monetary stimulus ends, the economy takes a big dive in the short term. If the monetary stimulus continues, the economy takes a bigger dive down the road. Somewhere along the line, the consequences of extended stimulus will play out. Why be a sitting duck waiting for it to happen? I’m staying conservative with my investments until SHTF. My only investment goal right now is to match or slightly beat inflation.

        • Pete in Toronto says:

          Bobber, I liked Jeff Macke’s line on CNBC during the financial crisis. He was asked what positions he held.

          “I have two positions. Cash and fetal.”

        • Bobber says:


          That is so descriptive.

          I’ve seen the bad side of a market, while sitting 100% in stocks. You buy, you lose, you buy more, you lose more, you double down, then you double down again, etc. By the time it quits dropping you’re in the fetal position.

      • Rowen says:

        The DC site is basically Amazon plugging into the DoD.

        And of course, Nashville is in the backyard of another company that’s squarely in its crosshairs.

    • California Bob says:

      “Amazon execs have up to date sales stats.”

      And they’re listening on Alexa–Echo, Dot whatever you want to call it–to the conversations of worried consumers.

    • OutLookingIn says:

      Another Pesky Fundamental

      The Conference Boards measurement of consumer confidence has plunged lower. The consumer future expectations, relative to current conditions, is a recessionary signal and is one of the worst readings ever in that ratio.
      The two month drop in the Conference Boards index, was the steepest two month drop since 1968! This is a leading indicator as downturns in this report either coincide with a recession or occur a few months prior.

  13. Aja8888 says:

    LIC HQ2? I still don’t understand why they bought Whole Foods.

    • OSP says:

      I always thought it was to further their pharmacy aspirations after acquiring PillPack

    • Art says:

      Amazon just acquired Eero mesh wireless, too.

    • Bad Seed says:

      I agree. The Whole Foods purchase is a mystery in how Amazon has run it since they bought it. The supermarket chains were afraid of what would become of their market share when Whole Foods drastically reduced their prices. Except they didn’t and don’t plan to at the moment. Odd purchase for now.

    • Rowen says:

      The Whole Foods acquisition will probably make more sense once Amazon Flex becomes fully fleshed out.

      I think Flex has the potential to wipe out most of the on-demand delivery services.

  14. KPL says:

    On Twitter…

    “Alexandria Ocasio-Cortez
    Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

    “She added that if New York had $3 billion to give away to Amazon as a part of this deal, it should be able to find the money to pay teachers and fix the subway.”

    Half-truths is the way of life with AOC.

    Firstly let me state… I am against any give away.

    Now let us discuss the give away of $3 billion. It was on the basis of the economic activity that would be generated in the future due to the Amazon investment. Thus theoretically there was an expectation of tax inflows against the giveaway of $3 billion. Instead she is talking about a giveaway of $3 billion without any inflows. Since politics is all about optics, this point will barely be noticed and if noticed it will be brushed aside as inconvenient truth.

    The end result of such politics and obfuscation will be rise of someone with all the wrong ideas.

    • MD says:

      ,..or the rise of someone with a backbone who doesn’t capitulate to corporate bullying and blackmail.

      One or the other.

      After all, mega-rich corporations – contrary to neoliberal dogma – don’t provide jobs as a ‘social service’. They create them because they need to in order to increase profits.

      And the very fact that despite the fact that Jeff Bezos could afford to build and run this HQ from his own personal stash, should give you cause to think when the corporation he owns comes along with the begging bowl looking for handouts, when it could so very easily do without those handouts and the money be used to help people who REALLY need it instead (ie not wealthy stockholders).

      • Upstate CFO says:

        Well said MD. The optics are obvious in terms of give-away. You want an HQ – BUILD IT YOURSELF. AOC and the others on that point alone are correct. They Amazon do not deserve or need the money. If you dont like how this played out then pay for it yourself. Crowdfund a billionaire if thats what posters want here. The people won a rare victory over a business that does not need public funding. Period.

        Oh I guess the personal or CORPORATE responsibility the dear Right Wing espouses does not apply LOL!

      • Saltcreep says:

        And the really grating aspect of such welfare for big business is how blatantly unfair it is in terms of competition. A public authority should simply be forbidden by law to offer different conditions to different companies.

        These sorts of shenanigans are all about mega corporations playing different local authorities up against each other in a competition to offer the most attractive terms, in order to help the big players consolidate their market power and competitive advantages, whilst less powerful companies live or die by a harsher playbook.

        • MCH says:

          I think it’s a disgrace that Amazon went after such subsidies. If you look at the WTO cases vs Boeing and vs Airbus, this is what you would call launch aid. If Amazon has a competitor in the E.U., they could legitimately run a lawsuit and win.

          Then again, the states set themselves up for this crap, look at all the credits to lure Hollywood. How many people complains about those? Or SF’s tax packages for the tech companies. It isn’t fair to the smaller guys. However, the local govt aren’t completely stupid. They get something out of it. I just don’t think they know how to calculate it correctly. And they front load the risks, I wonder if any put in a clawback clause if said jobs don’t materialize.

          The problem is that state aid has become a regular behavior, Amazon isn’t doing anything new. Even Apple has extracted a whole bunch of concessions from Cupertino for the space ship. Although no one will say it, I am also sure they did the same to Austin for their campus there.

    • GuiriCateto says:

      “I am against any giveaway…now let’s discuss the giveaway.”

      That is a giveaway.

    • Bobber says:

      KPL, what makes you think those inflows won’t happen without Amazon?

      Bloomberg was looking for an easy way out. He wanted to win a cheap victory for New York, even though this would have been a detriment to other cities and the overall economy. Amazon has enough going for it right now. It doesn’t need public support. At this point, it’s growth should be creating anti-trust concerns.

      Also, what kind of presidential candidate would Bloomberg make if he so willingly supports big business to the detriment of the public? Candidates that don’t understand the job killing aspects and wealth concentration aspects of big business are not qualified. As a billionaire, I doubt Bloomberg cares too much about wealth concentration, nor does he understand how it impacts the sustainability of our economic system.

  15. Japser says:

    The new Amazon HQ would have been misery incorporated for the existing residents of Long Island city. The 6 figure jobs would go to programmers who graduated Stanford while the rest get the crumbs. Meanwhile the ‘gentrification’ of LI City would have meant soaring costs in housing and everything else, not to mention the congestion.(see Seattle)

    I have no doubt that at least 25K people would have been forced to leave LI city due to soaring rents had the HQ gone through.

    NYC is too damn crowded, the weather is bad and the revenue generated per square foot is dropping. The place is now dysfunctional and tax revenues are dropping in the BOOM times!

  16. RTR says:

    Wolf nailed it. I noticed no mention of moving the project to another contender city and realized hey what wolf had to say about This?

    As someone deeply engaged in NYC Commercial real estate Ive read all the responses and was leaning on the side of union mafia getting in the way at first glance. AOC is smoke and mirrors. bark about wrong things what about Amazon is pushing us towards a jobless future. I bet she has a box waiting for her with the doorman right now. Or the fact that they supply the us military with cloud based services.

    Citi Corp building stated Amazon who would slowly transisition from citi corp into the new HQ stated last week Amazon never signed and LOI let alone a lease.

    We have been getting glossy flyers in the mail at our residence every week about how Amazon is so excited to be your new neighbor.

    Industrial real estate has been so hot and we have seen lease pricing fall and large vacant warehouses that were leasing at the sqft price of smaller buildings sit empty for over 6 months.

    Sales prices have held up but do to the fact that we have elimated over 10million Sqft of industrial real estate to the housing boom.

    Maybe this might finally make few people realize the begining of the end is here.

  17. MoreMoneyPlease says:

    Wolf – not only was Amazon pullout prudent due to the”shaky global economy” economic reasons, it will help with the less than stellar press they have been been drowning in lately.

    1. “Get the Helipad Out!” banners in Queens. (perhaps best not to mention the “skip the crowded train” helipad until after the deal is sealed?)

    2. $11.2 billion Amazon profit in 2018 results in zero federal income tax (rebated $129 Billion, a negative 1.0% tax rate). $5.6 billion in 2017 was ZERO income taxes too (per Fortune article, released Feb 14th)

    3. Below the waist photos of the worlds richest man. (yikes)

    4. Most expensive company on the planet pressured to raise minimum wage (yet counters cost increase by dropping options, etc)

    5. Ongoing war of words with the twitter in chief (remember 2017 postal service, zero tax, Bezos bashing tweet?)

    6. Falsely or not, Amazon labeled the destroyer of retail companies and retail jobs (scapegoat for next recession)

    7. ICE facial recognition sales causing negative publicity.

    8. 1 in 3 Arizona Amazon workers on food stamps, working at a company valued at $1 trillion? (Political fodder at best)

    Could type all night , but it isn’t good press the our 2019 social/political/financial environment. And Bezos knows everyone will be looking for a scapegoat during the next recession, so best to start avoiding the hornets nests sooner than later…

  18. Bernadette says:

    “Pork Belly” envy?

  19. Tom says:

    Maybe Amazon is waiting for a big shoe to drop in the economy and then come out again looking for a new place. I bet the sweeteners that municipalities will throw them are bigger and better for the company. I bet a bunch of places are reaching out to Amazon with “better deals” now that NYC said “no”

  20. yngso says:

    FAANG health in general, failing iphone sales, and now this?

  21. OriginalFrank says:

    “,..or the rise of someone with a backbone who doesn’t capitulate to corporate bullying and blackmail.”

    Let us hope she doesn’t rise any further at all, but quickly sinks under the weight of her lack of intelligence, cow farts, rebuilding all structures in the US, killing airlines and nuclear power, building high speed rail to nowhere, and all.

    I am sure her descent to oblivion will please her former co-workers from whom she reportedly stole tips, demonstrating at the outset what a socialist really is.

    • doug says:

      I did not think this type of personal unsubstantiated attack was the norm here…

      • OriginalFrank says:

        Which part of the material do you consider unsubstantiated?

        I will agree that my conclusion on her intelligence and related likely speedy descent are simply conclusions based on the rest of the presented items. However, those other items are voluminously sourced. Among those, was there one or more that you doubt and desire links to support?

  22. Hugs says:

    At some point the SEC and the Amazon board of directors are going to have to address the reckless private behavior of Amazon’s CEO. No-fool-like-an-old-fool is the saying that comes to mind when a middle age or older married man starts chasing women. Amazon’s mystic is fading. Bad luck for NYC.

    • California Bob says:

      “At some point the SEC and the Amazon board of directors are going to have to address the reckless private behavior of Amazon’s CEO.”

      Yeah, just like the Tesla board and the SEC really let Chairman Musk have it. They sure showed him.

  23. safe as milk says:

    nyc’s economy has become so tied to wall street over the last two decades. this was a big chance to move move towards tech. yes, it was a sweetheart deal for amazon but in my opinion well worth it. i say that even though it’s good for me personally that they aren’t building h2 in lic because my wife’s surely would have lost her studio lease there.

  24. ooe says:

    corporations never deliver on the promise of job creation. GM was given billions of dollars in tax abatements =-=it went under in 2009′; Fox conn- $ 3Billion in tax credits ‘ where are the jobs. there a dozens of examples of this fact. Too numerous to write down.

    • SMH says:

      In order to get the tax credit they needed to create the jobs. The plan was very well designed to ensure all the benefits to NYC had to occur to receive the tax benefits.

      • safe as milk says:

        @smh “The plan was very well designed to ensure all the benefits to NYC had to occur to receive the tax benefits.”

        exactly. the deal was cash flow positive for nyc. cuomo and diblasio don’t agree on much but they both were enthusiastic for this deal.

        it’s not fair and it’s not capatilism but that’s how the game is played. goldman sachs got free ground rent for putting their headquarters in battery park after 9/11 but nobody talks about that deal.

        the front pages of the ny post and daily news both have pix of aoc and co. with headlines to the effect of “here are the people that just cost the city 25k tech jobs.”

  25. Dave says:

    I’m glad Toronto didn’t win the Amazon bidding for their HQ. Also, hardly any incentives were offered to Amazon from the city of Toronto.

    I like Amazon but they sonr need free money but they can ask for it I guess.

  26. SMH says:

    But now the politicians say they have that $3B tax credit to pay for infrastructure, the subway, schools etc…

    Someone needs to explain to them how taxes work

  27. c smith says:

    “Why not do that from get-go – without the taxpayer wealth transfer?” Because they can get it, and rightfully so. They are investing $ billions in the city, and these investments are not riskless. Does no one understand that nothing happens economically until a private sector actor does something? Government produces NOTHING – it only siphons resources from productive people.

    • Wolf Richter says:

      So you’re saying, the government should always subsidize a huge company — but not a little company? This is a redistribution of wealth, from taxpayers to Amazon. Amazon is free to build its HQ2 in New York City. It just needs to pay for it, just like I need to pay for it when I build my HQ2 shack in NYC.

      • safe as milk says:

        another aspect of this deal was that it exempted amazon from the community review process. to me, that’s even more concerning than the tax break. the city has been permanently damaged by the lack of review in the past and we don’t need to repeat the mistakes of the robt. moses era.

  28. timbers says:

    Wall Street is roaring. Every new whisper of a trade breakthrough sends Mr Market higher. Never mind it’s the same trade breakthrough every time, that so far doesn’t happen. But judging my Mr Market’s reaction, I guess we’ve about 3 trade breakthroughs so far.

    And with Europe’s economy tanking, there is talk of more QE and interest rates cuts in Euroland.

    Only a matter of time, IMO, before the Fed starts cutting rates and goes all in on bigger and better QE.

    Especially if Mr Market tanks and throws a hissy fit again.

    Powell sure showed Mr Market who’s boss.

  29. Lisa says:

    Individual CITIZENS across the US have been, are and will be the SIGNIFICANT CONTRIBUTING SOURCES to any revenues that the CBO ever pays out for any welfare to US CITIZENS.

    READ 4.3 of:

    Following sentences are excerpted from 4.3. NOTE, changes in year 2025, the TAX BURDEN that supports US CITIZENS is NOT SOURCED from any corporate contributions to US tax revenues.

    “Individual Income Taxes In 2018, receipts from individual income taxes totaled nearly $1.7 trillion, or 8.3 percent of GDP. Under current law, individual income taxes are expected to rise by 4 percent, to over $1.7 trillion in 2019, CBO projects.”

    “Expiration of Temporary Tax Provisions After 2025. The most significant factor pushing up taxes relative to income is the scheduled expiration, after tax year 2025, of nearly all the individual income tax law changes made by the 2017 tax act.

    “Payroll Taxes Receipts from payroll taxes, which fund social insur-ance programs, totaled about $1.2 trillion in 2018, or 5.8 percent of GDP. ”

    “Sources of Payroll Tax Receipts. The two largest sources of payroll taxes are those that are dedicated to Social Security and Medicare Part A. ”

    Corporate Income Taxes In 2018, receipts from corporate income taxes totaled $205 billion, or 1.0 percent of GDP. CBO expects corporate tax receipts to rise by $40 billion in 2019, to 1.2 percent of GDP.

    Who pays the most taxes in the US? It is NOT any corporate entity.

    Read the quoted sentence for Individual Tax share to Govt. Revenue and then the last quoted sentence for Corporate Tax share to Govt. Revenues for 2018.

    THIS is the TAKE AWAY:

    That’s a share of 8.3% for individuals VS 1.0% for Corporates as percent of GDP, and that is the percentage share that is significant. So, who’s paying what, and who isn’t?

    • Lisa says:

      The real conclusion and REAL TAKE AWAY is that the $3billion or whatever CON never should have been offered to AMAZON, or to any other corporation EVER. Any corporate entity should be paying for the PRIVILEGE to be included in the neighborhood.

  30. RD Blakeslee says:

    Amazon customers can merely pragmatic.

    Use Amazon if it’s advantageous, don’t if it isn’t. What they do (or don’t) in NYC is of no personal consequence.

    There’s more to it than that, of course. The cosequential questions about an individual’s macroeconomic future also are dealt with pragmatically and are as independent as is reasonable from the entire fiat financial system.

  31. Dan says:

    There is a possibility that Amazon didn’t really plan to build an HQ2 and used this gimmick to obtain a lot of city development plans that no one has access to; think about it, all cities have shared their city development plans with Amazon. Amazon knows where these cities will be expanding and will be able with its enormous money to buy up all kinds of real estate on the cheap in the areas that these cities are planning to expand to. Amazon executives might be laughing right now.

    • Longtime Listener First Time Caller says:

      I don’t think they we’re looking specifically for development plans, but believe part of their search for HQ2 was a mining expedition. Amazon loves data and empirical decision making. I’m sure Amazon has built a database of their findings/bids from HQ2 and has people mining it and to find justifications for other facilities nationwide.

    • Abomb says:

      Not sure I understand this comment. I would expect City development plans to be fully public documents. At least they are around here. What do you mean “City development plans”?

  32. I think he backed away from NYC where the people who put his sex life on the front page and tried to extort him, where they and their minions live. Then Ocasio Cortez took a victory lap. Rough town

  33. TrojanMan says:

    With the stock market starting to climb back toward its highs, it feels like the Fed has successfully engineered us away from a slowdown. I think they probably kicked the can through the middle or end of the year and then they’ll start cutting rates and starting QE again after the slowdown starts again.

    Looks like consumer confidence recovered in January as well. Some good old Fed magic.

    Let’s keep this party going!

  34. David in Texas says:

    A lot of us breathed a sigh of relief when Amazon did not pick Dallas, despite the best efforts of our city “leadership” to hand a billion dollars over to the richest man on the planet.

    Thousands of local small businesses get nothing from the city/county but tax bills and other hassles. These are the people who create sustainable jobs, and who invest in their community.

    AOC is a lunatic, so it’s a shame that the public will perceive that she is the face of the fight against corporate welfare.

    • MCH says:

      You know, I feel sorry for these guys.


      They put in the money on what they think is a done deal, and they’re on the losing end. I suppose the other side of the argument is: “well, they had money anyway, so, no one in the government twisted their arms to take out loans for this nonsense.”

      But Amazon screwed up big time too, they made a huge production out of this thing, that’s practically painting a target on their back. It’s kind of like the Olympics, no rational country in their right mind would want to host it because of the costs. The argument there is always the tourism dollars. Amazon would’ve been a better spend. But it is also really unfair to a mom/pop shop.

  35. Flying Alien says:

    Been lurking here for almost a year, did not say anything because I did not have anything meaningful to contribute. Technology and finance are worlds apart. But in this case I have one thing to say; maybe this is a brilliant move to position said politician for a run for the white house.

  36. Ehawk says:

    Yeah right. The Actual people that live in Queens and surrounded areas would’ve been foooked with the rise of cost of living. Most Jobs were gonna be for Indians and Chinese specialist and all those Americans MBAs ans CPAs from all over the US.

    But, the average person living around there would’ve been force to leave, as it’d be to costly to afford it.

    Besides, hundreds of small business create jobs, and don’t get tax breaks from the GOV. It’s the opposite, they get hit with countless and bogus laws and a regulations that makes it hard for them to stay afloat.

    • Stephan in NY says:

      People really need to wake up and realize we don’t need to sell out our cities. And people need to wake up and realize it is the government doing the selling. Why are there 250,000 vacant apartments in NYC, the majority of them held off the market and empty as investments? Why are there 250,000 H-1B workers in the NYC metro area? Are companies paying in to build housing for these workers? Why do we keep bringing in wealth with the EB-5 visas?

      Simple answer is the city, state and federal governments are more interested in bringing in more money than what is happening to their citizens. Basically they figured out they can export our jobs overseas and then import back money and who needs citizens. Soon they will be offering American citizens one-way flights out of the country as a way of solving inequality, the homeless issues, etc.

      Anyway, best thing to do is write the newspapers and get them to run stories to piss everyone off and force the issue. And don’t just write them and say “my rent is too high”…write them and give them facts, names to contact, a good story to write. Do the reporters job for them and you get a better chance of getting the story told.

  37. Michael Fiorillo says:

    Please go back under your rock commenting at Zero Hedge. You’ve got nothing to add here but the stank of your ignorance.

  38. John says:

    Only rich a$$hole who earned his millions can speak his mind nowadays.
    He said what everybody on 7 train was thinking,hence the brouhaha and demand for apologies which were not forthcoming.
    Way to go,John Rocker !

  39. Bobber says:

    What’s your point? Hate is good?

    • John says:

      Hate is neither good nor bad,just natural.
      I am not a tenured radical/professional bleeding heart who is paid to love derelicts,public leeches and petty criminals whose population in NYC is constantly increasing,thanks to taxes paid by the companies and blue collar working stiffs like me.
      NYC wanted to milk Amazon dry-Amazon said “DROP DEAD” like Jerry Ford said in 1975.Is not it refreshing?

  40. Iamafan says:

    Why NYC???
    Ask yourself, what business is New York??
    I think Amazon is planning to launch their payment platform – a P2P system like Alipay.
    Why bother to be in NYC if you won’t be a bank?

  41. Nicholas says:

    Off topic:
    When will the commercial plane glut hit Boeing plane orders?

  42. Sydney says:

    I’ve been on other side – inside the companies looking for space. In my experience the company already knows what city they want to move to, often down to the building(s) or submarket, before any governments get involved. Sometimes it could be two or three cities, max. Never 20 or 50 – that was a preposterous game by Amazon. The goal is then to get the most subsidy possible for that predetermined location. So of course you give the poker face impression it’s a true competition.

    Once it’s announced you promise whatever is required for their program XYZ funding, knowing some of the actions will indeed come to pass, but some might not due to unforeseen future business changes. But that will be two or five or ten years later when the spotlight is long gone. And then you take the check and do what you were going to do anyway without the check. And in return you give the local politicians their PR photos and press releases.

    I have no idea why state and local governments have never caught on to this. Actually I suspect many have, but prefer to pretend otherwise so as not to kill an avenue for making themselves look effective.

    Amazon may simply have decided a multi year public battle and negative PR to build in New York wasn’t worth the bother. They can get by fine without the subsidies – that was just gravy – and can add employees and space other places without all the fuss. I don’t know that this decision signals anything at all about their belief in the current economy, and would actually bet it doesn’t.

  43. RTR says:

    Why stop at Amazon? Why they don’t go after Hollywood? The studios are givven massive tax incentives to film in NYC “Made in NY” what’s made here? Is a pyramid of corporations who set up a corporation that owns the tv show, movie, etc then everything is temp work (1099). They kill all the local business take up street parking with their “mayors office permits” for their biggest campaign financiers… they have their own caters who work like all the small business that feed off the industry on tiny profit margins.

    These aren’t permanent jobs created? long term benefits, pensions etc? These people are lured into the disolusion of fame and the opportunity to work along side “famous people” what ever that means? All in exchange for endless mental anguish, long and unstabble hours just to keep churning more poor content. And the moment the state talks about not extending tax credits – it’s devastating… And the studios do what you expect? threaten to stop filming in NYC!

  44. Gian says:

    This article comes on the heels of a recent article spotlighting yet another big box retailer, Payless Shoes, shutting its doors, due to online culprits, including Amazon. However, it now appears the online giant is facing troubles of its own, which is hard to believe in this age of browse, click and receive your merchandise without so much as an Uber ride to your local mall. I suspect that at least part of Amazon’s decision was in fact based on opposition from nut bags like AOC and the pending divorce of big daddy Bezos. Why would he want to acquire such a huge asset on US soil when he can shelter it off shore and keep his wife’s lawyers (leeches) at bay? Also, I doubt Bezos’ ego would allow him to share the title of richest people in the world with his wife.

Comments are closed.