ECONOMIC FORECAST
higher prices , eat out less , and the lower demand creates a vicious cycle that stalls the economic growth . Testa notes when flights and hotels become more expensive ( thanks in part to higher oil prices ), businesses are less likely to greenlight travel , and that knocks over another domino that will hurt local retailers .
Another risk is the loss of a financial lifeline . The first day it was available in her Brentwood locations , Roost applied for a Paycheck Protection Program loan . “ Without that , we wouldn ’ t have been able to stay open ,” she says . If an even more dangerous new variant emerges or if things take a darker turn in 2022 , that type of lifeline is very much in doubt . “ Naturally our brains can ’ t help but think , ‘ What will happen next year without that government assistance or any kind of help ?’” Roost says . There are countless Vine + Grains with this anxiety . “ Mid- and small-size businesses are the heart of everything in Sacramento , and they got hit pretty bad ,” says Varshney ,
adding that many only survived thanks to aid like PPP . “ On their own , I ’ m not sure if they can bounce back as fast or continue to grow .”
As for growth in population ? Varshney thinks it ’ s a mistake to assume that one recent driver of the region ’ s growth — an influx of 20,000 people from the Bay Area — will continue into 2022 . He identifies this as another risk . “ People thought that Bay Area migration would go on forever , but that ’ s going to change ,” Varshney says , as technology companies are now looking instead at Texas , Florida , Arizona and Nevada . The overall “ pie ” of California is shrinking . “ We keep thinking that it ’ s a zero-sum game , or that we are winning because the Bay Area is losing ,” Varshney says . “ But California has been losing overall . California has issues that are not easily solved .” He ticks them off : homelessness , the high cost of gas and inflation , and concludes that “ everything is out of whack .” He says this is why California has a “ net migration loss for three years in a row .” Then there ’ s the labor shortage — a continuing struggle for Roost . “ For everyone , the most limiting factor is going to be access to talent and keeping employees ,” Blackwood says . This is especially true in the service sector , as Varshney says the region is overexposed to the service sector “ compared to other comparable metropolitan centers ,” and is dependent on minimum wage labor , “ which in many cases is not coming back .”
The nuance to nuance
Nationally , there ’ s growing awareness that top-line numbers like the gross domestic product , the unemployment rate or the S & P 500 tell an incomplete story of the economy , and too often they gloss over issues of inequity . This can be true at the regional level . “ Things are going to be better . We ’ re moving in the right direction ,” Blackwood says . “ But who ’ s moving in that direction ?” That could vary by community . “ There ’ s a new recognition
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48 comstocksmag . com | January 2022