Seminars, the Debt Ceiling and this is the Year of...
… The Rabbit.
This is not only the year of the Rabbit, it is the year of the Water Rabbit.
You are a rabbit if you were born in the following years: 1939, 1951, 1963, 1975, 1987, 1999 or 2011.
By the way, this used to be the time of year when you really did have supply issues in China because everyone took the next four weeks off.
Business owners in the US made it a point to order ahead to make sure their product was in the US before Chinese New Year.
Staying Informed – as a business owner, GM, or manager, you are obligated to stay informed, both for improving your business and by extension, your employees.
To that end:
Two events are coming up that you should attend.
First, a seminar this Friday put on by the insurance firm Marsh McLennan Agency. There is an HR segment at 12:45 to jumpstart your workforce by motivating, incentivizing, and keeping your talent engaged. I’ve written about this often and you don’t need to do anything big; it’s the little things that count.
The second part of the seminar at 2:00 p.m. is about buying or selling a business. I am the moderator on a panel that will discuss what factors make this the year to buy a business or sell your business. The panelists are excellent and it’s worth attending just to learn from them. Both take place in Cypress with a pre-seminar lunch at 11:00 a.m. (along with a massage) included.
The second event is hosted by Risk Management Associates and features Professor Manfred Keil from the Claremont Colleges. He will take an hour to talk about southern California economic trends and provide a forecast. He is very informative and will NOT put you to sleep. This is the following week, February 2 at 5 p.m. in Ontario. The link is here. It is $75 to attend and includes beverages and heavy appetizers that always function as my dinner for that evening. It does sell out, so register now.
Finally, I would also encourage you to support your industry associations. Many will lobby hard for their members and there is much information to be had from their knowledge.
What happens when there is too much month at the end of your money?
You do what the federal government is doing now: prioritize your payments. Why? They cannot borrow anymore and their expenses exceed their income so now they need to stretch out their cash until congress can decide how to renew and increase the Federal Treasury line of credit.
The US Government has a debt limit of $31,400,000,000,000.00. That’s what $31.4 trillion looks like numerically.
I remember when I was a kid, I thought a trillion was a made-up number, like a gazillion. Not so much anymore. I guess gazillion is next.
I mention this because we have reached a limit on how much the US government is allowed to borrow, as mandated by Congress. This is the Debt Ceiling you may hear about.
It’s like you are taking home $75,000/year, but spending $80,000/year. You are running a $5,000 deficit but you have a $15,000 credit card that your borrow from so you can buy groceries, play golf and go to concerts. Well, you have now maxed out your credit card and the bank is just taking forever to renew the line, asking for more documents to verify your income, and then your account officer goes on vacation but will be back in June. You just have to figure out how to get by until then.
Since the government’s expenses exceed its income, it must borrow. That’s why it has to issue bonds (get loans) to fund its day-to-day expenditures.
So, when the line of credit is maxed out, one of the things they can stop doing is contributing to the postal workers’ retirement and the Civil Service Retirement fund. Basically, putting off payments that aren’t essential.
Kind of like you stopping your contributions to your 401k; it frees up some cash but doesn’t solve the problem.
Right now, it’s not a big deal. After all, congress doesn’t have to decide until June, and that’s soooo far away.
This is going to be interesting to watch and the stock market is NOT going to like it. Stay tuned…
Economic Update - speaking of staying informed…
I enjoy reading The Kiplinger Letter, an economic newsletter that has been around for 100 years. Their economic forecast for the year:
GDP Growth: 0.8% for 2023 with a short recession. If we don’t have a recession, 1.3%.
GDP was 2.1% in 2022.
Inflation: 3.2% by year-end. That’s half of what it is now.
Impacting this will be China’s economy getting back to normal, minimizing supply chain issues.
In 2022, anytime someone sneezed in China, they closed a port for 30 days. That’ll impact things.
Unemployment: 4.7% at year-end.
We finished 2022 at 3.5%. 4.7% isn’t that bad (unless it’s you that doesn’t have a job) and as of now, we have 10.3 million jobs out there.
My sense is that this will be a white-collar recession.
Crude Oil: below $80/barrel.
It’s $82 now, so basically holding steady. This is great news for producers since drilling is profitable at that price.
If it falls below $50, then profit margins really get tight.
That’s it, folks.
From the high desert contractor:
97% of the people who quit are employed by the 3% that never gave up.
Have a good week and don’t give up; be part of the 3%.
