It’s football’s bowl season, and it’s generating must-see competition on the playing field.
But when these holiday season games are done, the California economy still will provide plenty of noteworthy contests to be fought through 2023.
Coming off a nearly unpredictable 2022, which California economic players will be winners – or losers – in the coming year’s business battles?
Note the gyrations. In the summer quarter, California’s gross domestic product was growing at a 3.8% annual rate, 12th best among the states. That’s a reversal from the spring’s 0.5% drop. But the California economy grew 7.8% for all of 2021, No. 5 nationally.
So let’s handicap noteworthy financial skirmishes that will dominate 2023 business arena. Many of these economic clashes, like the flood of post-season football games, feature heated rivals who will be looking to gain an edge in long-running competitions. A sagging global economy also creates a slippery playing field for most business combatants.
So ponder my 2023 lineup of California Bowls that could decide if the state’s business scene avoids the ultimate losing streak – a recession.
Shrinking Beach Bowl (Surfers vs. Waves)
Surfers, the long-dominant, environmentally friendly crowd, may have run into their toughest opponent. Waves and angry seas pounding our shorelines are literally erasing California beaches.
A small strip of wave-wracked coastal train tracks in Orange County may be a battleground test. Transportation officials want to use boulders and other hardened surfaces as a salve. But such tactics have long-run ecological challenges.
Betting line: Waves and their serious commercial effects will make life tough for the Surfers.
Power Play Bowl (Greens vs. Chiefs)
Greens, California’s clean-energy contingent, has enjoyed a lengthy grasp of policy power. Chiefs, leaders of energy-producing businesses, are aggressively pushing back.
Utilities won a late 2022 battle to limit homeowners’ solar roof benefits. Oil producers seem ready to battle drilling limits and profit penalties. And 2022’s high gasoline prices soured numerous Californians on the cost of being green.
Betting line: The Greens will prevail, but it won’t be simple.
NoH2O Bowl (Lawns vs. Almonds)
California is essentially running out of water, so there’s likely no true winner in this tug of war. Who pays the water-shortage tab — residential or agricultural users? Lawns go brown or Almonds go fallow?
This game’s subplot is that this is basically a cross-state war that pits inland farmers against big-city coastal types.
Betting line: Almonds and other non-essential crops will be “losers,” but the loss will be iced over with farmers being paid not to use water. Yet this is only a short-run truce in this conflict.
Homebuying Crash Bowl (Sellers vs. TBD)
Sellers were the pandemic era’s economic MVPs – until the Federal Reserve crashed the homebuying playing field in mid-2022 with soaring mortgage rates to slow runaway inflation.
Sellers now find their old opponent, the House Hunters, a no-show thanks to inflated house payments. So owners have to determine if they’ll fight with fellow owners by cutting prices or take a “bye” and sit the year out.
Betting line: Sellers will get antsy and battle other owners with noteworthy price cuts.
Tech Trash Bowl (Dreamers vs. Bottom Lines)
Dreamers, aka entrepreneurs with wild tech-laden ideas, in every cycle seemingly get flooded with investment dollars. It creates what’s appears to be an endless winning streak. Bottom Liners stay on the sidelines until a whiff of trouble strikes, and then insist on old-school results: profits.
So technology’s upswing was trashed in late 2022, falling into a layoff-filled losing streak.
Betting line: Bottom Liners control 2023, and that’s worrisome for California and the national economy.
Cubicle Bowl (Bosses vs. Worker Bees)
Bosses have owned this contest ever since the Great Recession put fear into the job market. Worker Bees, however, deftly used the pandemic’s remote work shift to put this rivalry on more level ground.
Back-to-the-office moves have well received by employees, leaving huge corner office questions such as future staffing and the value of office space.
Betting line: Workers Bees don’t want cubicle life but risk losing momentum if a significant recession hits in 2023. Call it a draw.
Robots-R-Us Bowl (Humans vs. Machines)
Humans have less than politely told employers what they think of menial tasks. Machines – robots, phone apps, ordering kiosks and the like – might be employers’ best hope for salvation because heavily inflated salaries aren’t filling these job openings.
Betting line: This could end in a happy tie. Machines could fill some worker shortages. Humans could win more meaningful work.
Sports Spending Spree Bowl (Billionaires vs. Realities)
Billionaires in 2022 seem to have endless piles of cash to pay record prices for anything sporting – from marquee players to international athletic events to entire franchises. Economic realities should have slowed the sprint, logic says, but it appears the biggest checkbook still is the winning formula.
Betting line: Realties are losers because rich folks are ignoring the traditional economic playbook. Imagine the crazy-high price tag we’ll likely see on the Anaheim Angels in 2023.
Business Breakup Bowl (ESPN vs. Disney)
Speaking of sports and cash, ESPN is the athletic world’s information diamond. Its owner, Walt Disney Co., has a lagging stock and management discord. Would Disney jettison ESPN to soothe unhappy shareholders?
Betting line: An ESPN spinoff is an easy call for Disney’s new/old CEO Bob Iger. But companies sometimes cannot finish with an easy layup.
“That Costs How Much?” Bowl (Hawks vs. Doves)
Inflation was the economy’s trend-changing champion of 2022. Hawks want the Fed to keep up its intense fight against the painfully pricey cost of living. Doves fear the central bank’s economic throttle will prove too tight, creating a recession.
Betting line: This is the big “national” game of the year. Hawks will win, assuming the Fed’s “head coach” Jerome Powell is being honest about his team’s conviction to conquer inflation.
Mall Makeover Bowl (Bricks vs. Clicks)
Bricks were perhaps the economic “upset” victors of the year. Shoppers returned to brick-and-mortar stores for face-to-face retailing and cooled their clicking for goods online.
Clicks have had to rethink their click-to-buy strategy and overly rosy projections of retailing dominance. What’s the future of all those warehouses in California’s inland cities?
Betting line: If a recession does hit, lower costs will be the difference maker (and that’s good for Clicks.)
Bottom line
The best scouting reports suggest most economic players will act like the pandemic era’s surprising economic winning streak will likely end in 2023.
That means power – profit or policy – will gravitate toward lower-cost options as consumers and corporations play conservatively.
How long and/or deep the California “losing steak” becomes is the big question.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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