Washington's Birthday, bad Bad News, and Cal Competes
George Washington
Since George’s B-Day is February 22, let’s take a moment to think where this country would be without him.
God Save the King would be the national anthem and our flag would have some semblance of a Union Jack on it.
That’s not a bad thing, it’s just not the U.S. of A., your highness.
And there would be no country to claim the title of Back to Back World War Champs.
Now that I think about it, we could be speaking German.
He was the president of the Constitutional Convention in 1787; given his role in the creation of the greatest – and longest lasting - democracy ever, not only was he one of the founding fathers, it is not a stretch to say he was The Founding Father.
Effectively, no George, no USA. For real.
Washington’s birthday was the first federal holiday to honor an individual’s birth date. That was changed in 1971 and Lincoln was thrown into the mix and it was made into a President’s Day.
George Washington was so instrumental to the creation of this country, he really should have his own day.
Actually, so should Abe; he was no slouch.
This was a busy week of news. As I have said earlier, there are four types of economic news:
good Good News – good news for the Fed and good news for everyone
bad Good News – good news for everyone, but bad news for the Fed, causing them to continue to increase rates
good Bad News – bad news for everyone but good news for the Fed, causing them to stop raising rates
bad Bad News – bad for everyone and bad for the Fed.
So this week we had some bad Bad News.
The consumer price index – aka “headline inflation” – continued to drop but not as much as expected, indicating inflation is being stubborn about things, kind of like politicians and two year olds – but I’m being redundant. That’s Bad News. The bad part of the Bad News is that it encourages the Fed to continue raising rates. That makes it bad Bad News.
12 month CPI for December was 6.5%; for January, it was expected to be 6.2%, but it came in at 6.4%. Lower than last month but higher than expected.
Not to be outdone, the producer price index – PPI – the prices that wholesalers receive for the goods they sell - increased 0.7% from December. That’s way higher than the 0.4% forecasted.
It’s bad Bad News for the same reason as the CPI.
And now some bad Good News: Retail Sales were up 3% in January; expected was growth of 1.9%. That’s strong, and Good News for retailers.
The bad part is it tells the Fed the economy is still doing well, but their goal is to slow it down, so it’s bad for the Fed.
On the offset, some economists are suggesting that there won’t even be a recession at all given the strong employment figures.
There are too many moving parts that are moving like nothing we have seen.
Then again, many economic issues are caused by something we didn’t see coming, that disrupted things in very different ways.
And now there is talk of even seeing a 0.5% increase in rates at the March Fed meeting, but we won’t dwell on that.
Computer Chips – Supply is up and demand is down.
Memory and CPU chips are coming back into the supply chain but many others are still hard to source.
Namely chips used for the auto industry. These are still in short supply. How short?
3 million fewer vehicles made this year than otherwise could have been built. Believe it or not, that is better than the last two years.
2022 – 4.5 million fewer cars
2021 – 10.5 million fewer cars.
No wonder the car lots are thin. This won’t normalize until 2024 or even into 2025.
I guess it’s going to be a while until you can get a deal on a new car. Or a used one.
California’s Cal Competes
The next California Competes Tax Credit (CCTC) application period starts Monday, March 6, 2023, with at least $99.7 million in available tax credits. Businesses interested in applying can register to view a live webinar explaining the application process.
Since I am eternally optimistic that some of you can secure this tax credit, I list it here as a resource for your business.
The online application can be accessed starting March 6, 2023, at www.calcompetes.ca.gov.
It’s certainly no panacea for your business but if you qualify, every little bit helps.
The Superbowl
Everyone remembers the winning quarterback and the winning team, if only until the next Super Bowl. The losing team is forgotten much faster. However…
Jalen Hurts, the losing quarterback, did have something to say. Among his many comments, the one that sticks out is:
“You either win or you learn, that’s how I feel.”
Are you learning every time you don’t win or do you enjoy a bourbon or chardonnay and hope you get the deal next time?
Are you looking at the “film” of the lost deal and analyzing why it was lost? You should.
The professionals rehearse and study, rehearse and study. That’s why they are the professionals.
Be a professional in your business.
Remember, you either win or you learn. I’ve always called losing a deal “expensive tuition”, so make it count.
Have a good week and on Wednesday, raise your glass to George Washington, our Founding Father.
