It’s football bowl season and there’s a must-see competition on the field.
But when these Christmas games are over, the California economy will still have plenty of notable competitions to play through 2023.
After a nearly unpredictable 2022, which California economic players will be winners – or losers – in the business struggles of the coming year?
Notice the twists. During the summer quarter, California’s gross domestic product grew at an annual rate of 3.8%, the 12th best among states. That’s a reversal of the spring’s 0.5% decline. But California’s economy grew 7.8% for all of 2021, ranking 5th nationally.
So let’s prevent notable financial skirmishes that will dominate the business arena of 2023. Many of these economic clashes, like the spate of post-season soccer games, feature heated rivals trying to gain an advantage in long-running competitions. A flagging global economy also creates a slippery playing field for most business warriors.
So consider my lineup of the 2023 California Bowls, which could decide whether the state’s business scene avoids the ultimate losing streak — a recession.
Shrinking Beach Bowl (Surfers vs. Waves)
Surfers, the long-dominant pro-environmental crowd, may have encountered their toughest opponent. Waves and angry seas pounding our shores are literally wiping out California’s beaches.
A narrow strip of wave-swept railroad tracks on the Orange County coast could be a battlefield test. Traffic officials want to use boulders and other hardened surfaces as an ointment. But such tactics have long-term ecological challenges.
Betting line: Waves and their serious commercial impact will make life difficult for surfers.
Power Play Bowl (Greens vs. Chiefs)
The Greens, California’s clean energy contingent, have long held political power. Chiefs, leaders of energy producing companies, are aggressively pushing back.
Utilities won a battle in late 2022 to limit the benefits of homeowners’ solar rooftops. Oil producers seem poised to fight drilling limits and profit penalties. And the high gas prices of 2022 have angered many Californians about the cost of being environmentally conscious.
Betting line: The Greens will prevail, but it won’t be easy.
NoH2O Bowl (Turf 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 scarcity fee – private or agricultural users? Lawn is turning brown or almonds are fallow?
The subplot of this game is that it’s basically a multi-state war pitting inland peasants against metropolitan coastal types.
Betting line: Almonds and other non-essential crops will be “losers,” but the loss will be iced out by paying farmers not to use water. But this is only a short-term truce in this conflict.
Home Buying Crash Bowl (Seller vs. TBD)
Sellers were the economic MVPs of the pandemic-era — until mid-2022 when the Federal Reserve crashed the homebuying playing field with rising mortgage rates to curb runaway inflation.
Sellers find their old adversaries, the House Hunters, now a no-show thanks to over-inflated house payments. So owners have to decide whether to fight with co-owners by lowering the prices, or say goodbye and sit out the year.
Betting line: Sellers get nervous and fight other owners with notable price cuts.
Tech Trash Bowl (Dreamers vs Bottom Lines)
Dreamers, aka entrepreneurs with wild, tech-laden ideas, are seemingly inundated with investment funds every cycle. It creates a seemingly endless winning streak. Bottom liners stay on the sidelines until a hint of trouble arises, and then insist on old-school results: wins.
Thus, in late 2022, the tech boom was wiped out and caught on a losing streak of layoffs.
Betting line: Bottom liners are in control of 2023, and this is worrying for California and the national economy.
Cubicle Bowl (Bosses vs. Worker Bees)
Bosses have owned this competition since the Great Recession spooked the job market. However, Worker Bees cleverly took advantage of the pandemic’s remote work shift to level that rivalry.
Back-to-the-office moves are well received by employees and leave big questions about corner offices such as future staffing and the value of office space.
Betting line: Worker bees don’t want cabin life but risk losing momentum if a major recession hits in 2023. Call it a tie.
Robots-R-Us Bowl (Humans vs. Machines)
People have been less than polite in telling employers what they think of menial jobs. Machines — robots, phone apps, ordering kiosks, and the like — may be employers’ best hope for salvation because grossly inflated salaries aren’t filling those job vacancies.
Betting line: This could end in a lucky draw. Machines could fill some labor shortages. People could get more meaningful work.
Sports Spending Spree Bowl (Billionaires vs. Realities)
Billionaires in 2022 seem to have endless cash to pay record prices for everything sporting – from marquee players to international sporting events to entire franchises. Economic reality should have slowed the sprint, logic says, but it seems the best checkbook is still the winning formula.
Betting line: Real estate is a loser because rich people ignore the traditional economic playbook. Imagine the insanely high price tag we’re likely to see in 2023 with the Anaheim Angels.
Business Breakup Bowl (ESPN vs. Disney)
Speaking of sports and cash: ESPN is the information diamond of the sports world. Its owner, Walt Disney Co., has a declining stock and management discord. Would Disney jettison ESPN to appease disaffected shareholders?
Betting line: An ESPN spinoff is an easy call for Bob Iger, Disney’s new/old CEO. But companies sometimes can’t close with a simple layup.
“That cost how much?” Bowl (hawks vs. doves)
Inflation has been the economy’s turnaround champion in 2022. Hawks want the Fed to continue its intense fight against the painfully high cost of living. Dovish fear the central bank’s economic tightening will prove too tight and trigger a recession.
Betting line: This is the big “national” game of the year. Hawks will win provided Fed “head coach” Jerome Powell is honest about his team’s belief in beating inflation.
Mall Makeover Bowl (Bricks vs. Clicks)
Bricks were perhaps the year’s economically “disgruntled” winners. Shoppers returned to brick-and-mortar stores for in-person retail and cooled their clicks for goods online.
Clicks have had to reconsider their click-to-buy strategy and overly rosy projections of retail dominance. What’s the future of all these warehouses in California’s inner cities?
Betting line: When a recession hits, lower costs will make all the difference (and that’s good for clicks).
bottom line
The best scouting reports suggest that most economic players will act as if the surprise pandemic-era economic winning streak is likely to end in 2023.
That means power – whether profit or politics – will gravitate toward lower-cost options as consumers and businesses play conservative.
The big question is how long and/or deep the Californian “lowing steak” will be.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at [email protected]
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