I’m scratching my head at the proposed budget targets released last week. Overall, the concerns I have with this budget and approach are twofold: first, that lawmakers plan to increase the state’s budget by 30 percent to total $71B in the next biennium(what?); second, that spending of the one-time surplus should be on one-time investments (not on new programs with tails). My conclusion? The Democrats are not handling their trifecta of control very strategically. If the desire is to maintain control moving forward, it would make sense to think of the long-term implications of this increased budget. I fear that when the economy slows (which it inevitably will), there will be a budgetary trainwreck. I also wish that lawmakers would recognize that individual proposals, whether tax increases or mandates, compound upon each other and will cause real hardships for businesses and families alike. And while the majority CAN push them through, it doesn’t mean they SHOULD. I would encourage a little more grace and restraint in leadership.
We’ll continue to keep you updated.
See you in the trenches,
Where is the Economy Headed?
You know me, I continue to pay close attention to interest rates and the economy overall. I went down a serious rabbit hole this weekend reading all about the collapse of Silicon Valley Bank and Signature Bank, which is causing serious ripples. More on that later. First I want to talk about economic indicators for what’s ahead. People are still spending, companies are still hiring. Many analysts still expect a mild recession in the middle of the year, but with the continued strength of consumer spending and business optimism/continued hiring, projections are becoming more optimistic. This despite inflation that continues, albeit at a slower pace.
Some highlights on the economy:
Together, these indicators of are strong signals that we are not through with inflation yet.
So what’s happening with interest rates? The Fed raised its key interest rate again last month, the 8th time it has done so in the last year. Anticipate a few more small hikes ahead, as inflation is still so high and unemployment so low. All indications are that, at the FOMC meeting this week, the Fed will raise rates again, perhaps 0.25 – 0.5%.
And so, we’re back to the banks: Silicon Valley Bank and Signature Bank both were seized by regulators earlier this month. Each collapsed for markedly different reasons than those that slammed Lehman Brothers in 2008, but they exposed the banks’ vulnerabilities both to increased interest rates and their own unbalanced investment portfolios. And just this past week 11 of the country’s largest banks together have injected over $30B in another vulnerable Bay Area Bank, First Republic Bank, in part to stabilize that institution and also to shore up confidence in the banking industry more broadly.
I bring up the banks because, with the problems in the banking sector this month, there have been calls for the Fed to stop raising interest rates. But the strong February jobs report and this most recent inflation reading are sure indications – and I’m not alone in my thinking here – that the Fed will keep raising rates to tame ongoing inflation. Stay tuned for more.
See you in the trenches,
Power and Responsibility
At our Annual Meeting I talked about this idea that today’s leaders are burdened with the responsibility of ushering in Tomorrow. I wanted to expand on that thinking a bit today. Because we can’t take that burden lightly. It is an honor and a responsibility, that requires us to stay engaged and exercise our power on others’ behalf – within our unique spheres of influence. I’ve been thinking a lot about power this past week. Its shapes and forms, how people use it, the responsibility of those who have it… I had coffee with a coworker on Friday, we talked about this very thing, and I was reminded of advice I got years ago: be careful about wanting power/leadership. Of course, he had been referring to the burden of leadership.
Which took me down another rabbit hole, that of one of my favorite speeches by then President-elect John F. Kennedy, from 1961: “History will not judge our endeavors – and a government cannot be selected – merely on the basis of color or creed or even party affiliation. Neither will competence and loyalty and stature, while essential to the utmost, suffice in times such as these. For of those to whom much is given, much is required. And when at some future date the high court of history sits in judgment on each one of us--recording whether in our brief span of service we fulfilled our responsibilities to the state--our success or failure, in whatever office we may hold, will be measured by the answers to four questions:
So if you feel like you’re Yesterday, or even Today, acknowledge your power. With that power comes continued responsibility to share it, to use it in service to others, to develop others on their own leadership journey. Your Chamber strives to provide opportunities to do just that, so please join us! Our Young Professionals, our Ambassadors, our Chamber Connect opportunities and others are intended to bring us together!
See you in the trenches,
Investing in Tomorrow
I hope you were able to join us for last week’s Annual Meeting. I’m not exaggerating when I tell you it was our best yet. Really powerful, great energy in the room, strong speakers. Our theme was, “Investing in Tomorrow.” Our speakers addressed this theme through the lenses of people, culture, and technology. You can’t help but feel optimistic about Tomorrow when you listened to them: Jeff Aguy, our fabulous host (2043); Colette Campbell (Bremer); Dario Otero (Youth Lens); and Srini Somayajula (Ecolab). The room was filled with long time investors/partners, businesses large and small, young people, and so very many friends I don’t know yet. I loved seeing the new faces!
Every year my comments center on the themes I saw heard from you over the previous year. What I I saw last year was that people showed up differently. AND different people showed up. What I heard was uncertainty. And what I realized was that I, myself, am Yesterday. I don’t quite know when it happened, I didn’t believe it first, but – yes – I am Yesterday. The shift is underway towards Tomorrow and we, together, are burdened with the responsibility of ushering it in.
I also talked about this idea that change, the looming of Tomorrow, heightens our feelings of uncertainty. When we feel uncertain about something ahead of us, we instinctively slow down and get more cautious, to prepare for the potential “bad” that may be around the corner. The challenge, of course, is to embrace uncertainty. Lean in to surprise. After all, when in history has anything been “certain”? Simon Sinek recently spoke of this in the context of COVID and he said, “what happened over these last 3 years was a shocking period that REMINDED us that things are uncertain.”
We conflate normalcy with certainty. And that, of course, is the illusion.
As leaders we all can harness the approach entrepreneurs and small business owners understand viscerally: “how do we work in this environment and try something new?” We all have much to offer one another. We all need an eyes-forward approach, one that empowers an innovative spirit and forward thinking without losing what we know. We can double down on our inclusive approach to people and ideas. Tomorrow IS coming. The question is, what price will we pay tomorrow if we don’t adapt today?
Humble gratitude to the Chamber team, our member-owners (you!), and our amazing guests. Was a celebration of this community that made me very proud!
See you in the trenches,