The US Economy, the IE Economy, What's an Evergrande, the Year of the Dragon, and Who is Bill Shufelt?
The US Economy
Not a lot to report this week, but…
Consumers put the kibosh on new debt in December; it “only” increased $1,500,000,000.
In November, folks really ramped up the consumer debt by $23,400,000,000.
Either they maxed out the card or finished their Christmas shopping early.
Either way, it would be nice to see that number decline.
Inflation for the calendar year 2023 was 3.4% and core CPI was 3.9%.
For 2022, that was 6.5%. with core at 5.7%, so it’s an improvement.
And yes, just because prices are increasing at a decreasing rate, doesn’t mean they will go negative.
Unless you are in China where they are experiencing deflation. Well, 3 months worth.
But this section is about the US Economy, not the Chinese economy; that’s in another segment below.
Your 49-cent taco is never coming back. And it will be smaller.
The Inland Empire Economy
Before I get into the weeds, the Inland Empire – The IE – is essentially two counties: San Bernardino and Riverside.
San Bernardino is the largest county in the United States by size.
There are about 4,667,558 people in these two counties.
It’s the 12th largest MSA – Metropolitan Statistical Area - in the country, just passing the San Francisco MSA.
So now you know what I’m talking about, here are some stats, courtesy of Prof. Manfred Keil of the Claremont Colleges and Jonathan Lansner of the Daily Bulletin.
Since March of 2020…
Job growth is up in the IE +1.6%, down in Orange County -2.6% and L.A. County -6.4%
Worker growth is up in the IE +2.8%, down in the OC -1.6% and L.A. County -6.3%
Married households are up in the IE, down in Orange County and Los Angeles County
Seems like there is an allure to being in the Inland Empire if you want to start a family.
If you are looking for beaches, you won’t find them here; but it’s 45 minutes to Newport Beach.
Conversely, not a lot of homeless tents either. Oddly enough, that’s also 45 minutes away, except to downtown L.A.
And the home prices are 25% to 40% less than the California average, and more than half of the Orange County average.
Evergrande is Neither.
So, what is an Evergrande?
Once China’s second largest conglomerate/real estate developer, it’s new name in bankruptcy court is Nevergrand.
Just kidding about that last part. The name, that is, not the BK part.
A Hong Kong court has ruled that the company be liquidated, owing over $300,000,000,000 in foreign debt, not to mention what it owes to Chinese banks.
And in good CCP – Chinese Communist Party - fashion, the CEO and Founder has been “detained” by Chinese authorities.
Amazing what a real estate crisis can do to a company.
And a country.
Another coincidence. The company was started in 1996, the year of the Rat.
Read into that what you will. They certainly were not a Dragon.
It’s the Year of the Dragon if you follow the Chinese Lunar New Year.
Many Asian cultures celebrate the lunar new year.
You are a Dragon if you were born in the following years: 1940, 1952, 1964, 1976, 1988, 2000, 2012.
In Chinese culture, the Dragon holds a significant place as an auspicious and extraordinary creature, unparalleled in talent and excellence. It symbolizes power, nobility, honor, luck, and success.
2024 is forecasted to bring opportunities, changes, and challenges for Dragons. If you are a Dragon and you are seeking a shift in your current life, this year might offer a favorable chance.
Who is Bill Shufelt?
Spoiler alert: he is not dead, nor is he someone that turned his penniless life around in a made-for-movie script.
But he is an entrepreneur.
Bill had an idea about getting a piece of a $115 billion market.
1% of that market is… over $1 billion. Yeah, whatever. That’s what they all say: “If I could just get 1% of the market…”
He did the research. Less than 1% of consumers purchased the type of product he was thinking about. But over 50% surveyed said they would if the product actually tasted good.
So, all he had to do was to make it taste good.
While he worked his full-time job in finance, he spent time learning as much as he could about the industry. Then, like many entrepreneurs, he cut the cord from his nice job so he could work twice as many hours to make, well, nothing. At first.
He pitched his idea to hundreds of people in the business without success.
But in 2017 he finally got a bite and it was a good one.
He connected with brewer John Walker, and the two of them concocted a lot of batches until they found a recipe that was light years ahead of what anyone else was doing.
A non-alcoholic beer that actually tasted like beer.
They called it the Athletic Brewing Company.
It is currently the #1 brand of non-alcoholic beer.
So, how did Bill get to this point?
He saw a need and complained about it.
His wife told him to stop complaining and do something about it.
She supported his venture.
He studied the market: The non-alcoholic market was 0.3% of beer sales, but 55% of people surveyed said they would drink it if it tasted good.
He stayed in his job while he studied the issue.
He quit his job to commit to the idea.
He raised the money. $3,000,000.
He kept plowing through all the “No’s” to get to the “Yes”.
It took over 100 batches before they found the right flavor.
And all this before he even sold his first batch.
In their first year, they did 875 barrels. Last year, they did 250,000.
Sales exceeded $90,000,000, and it is the best-selling beer, alcohol or not, at Whole Foods.
It’s also the best-selling beer in its segment, surpassing Heineken and Budweiser.
And that’s what I call a success story. I’m guessing they are not even close to being done.
Finally, the urgent issue of the moment is that Valentine’s Day is in two days.
It really is too late to book a dinner at a nice restaurant, but not too late to secure flowers, gentlemen. Or a notecard.
Just a heads-up, guys.
Coming up this week: CPI, new jobless claims, retail sales, and housing starts.
