LETTER FROM THE PUBLISHER
Inflation Is Just One Price for the Global Economy
PHOTO BY TERENCE DUFFY
“ Nothing great was ever achieved without enthusiasm ."
― Ralph Waldo Emerson
It only takes a trip to the corner gas station to see firsthand what the headlines are telling us about inflation . Of course , we always expect gas prices to go up during the summer driving season . It ’ s as predictable every year as a 100-degree day at the California State Fair . But this year , record gas prices are a barometer of a much bigger problem . The latest U . S . Labor Department reports show that the price of everything is going up at a record pace . Inflation — the cost of goods and services compared to a year ago — is now over 9 percent , the highest it ’ s been in nearly 40 years . A big reason is the cost of gas prices , which increased 60 percent in the past year , according to the Labor Department . Since almost everything we eat , wear or use is delivered by trucks , airplanes and ships that rely on oil , a price increase that large has a ripple effect across the whole economy .
But the biggest reasons for the jump in energy prices and the rise of inflation worldwide are far more complicated than the price at the gas pump . Droughts , floods and war are shaping , making and breaking markets . As products move around the world — and manufacturing involves processing in many different countries — local businesses , from farmers to small entrepreneurs , often are small pieces of a larger global economic jigsaw puzzle .
In this issue , our story “ Seeds of Conflict ” follows the connections between those bright yellow acres of sunflowers along Interstate 80 and the war-ravaged fields of Ukraine . Some of us see them as a picturesque photo opportunity , but they are actually a factory of sorts , producing hybrid sunflower seeds to be planted by farmers in Ukraine and other countries to produce cooking oil sold throughout the world . But many Ukrainian fields are fallow and under attack in a war , reducing the country ’ s sunflower production by 40 percent and reducing the need for seeds from Yolo County farmers . By contrast , as the war has slowed exports of wheat from Russia and Ukraine , two of the world ’ s largest producers , wheat farmers in the Capital Region and other parts of the country have seen the price of their crop double .
At the same time , a stagnant economy in China , hobbled by COVID-related shutdowns that continue in some of its biggest cities , has stifled manufacturing . Flooding in some of its biggest ports has created shipping bottlenecks that have broken down
supply chains and produced inventory shortages for business . As you can read in our Special Section on construction , China ’ s pain is , to some extent , our region ’ s gain .
Demand for industrial and manufacturing space has grown , expanding development at Metro Air Park , McClellan and Mather to double normal levels , as distribution companies look to hedge against shortages by stockpiling material domestically , a practice known as “ nearshoring .” As one developer told us , distribution companies have traded “ just in time ” inventory management for “ just in case .” And in this case , it ’ s to the Capital Region ’ s benefit .
These stories underscore how intertwined local and international markets are in a global economy . Disruptions come with a price , whether it be a disappointed customer , a lost market share , or high costs — inflation — when supply and demand are out of balance .
But just as every action sparks a reaction , so too do events on one side of the globe have the potential to create both setbacks and opportunity on the other side . Growers , for instance , can reduce the acres they devote to sunflowers to better control their costs . Builders facing a 40 percent increase in lumber prices might find a substitute material or decide to change their designs .
It ' s a reminder that the marketplace is always dynamic , constantly offering challenges and opportunities , whether for a large company or a smaller entrepreneur .
In a survey of 1,199 entrepreneurs released in June by SCORE , a mentoring organization for small business , 93 percent said they were concerned about inflation , outranking concerns about taxes and government regulation . And 34 percent said it was the single biggest problem facing their business .
But on the bright side , the SCORE survey showed that entrepreneurs are not letting inflation slow them down . Fifty-one percent reported that they had made recent capital investments to buy new equipment , new vehicles or to expand their facilities , despite increases in costs . In short , inflation is a lot like the weather . We are all affected by it , we all talk about it , and most of us can ’ t control it any more than we can curb drought , floods or war . It ’ s simply part of the landscape that businesses learn to navigate to remain successful .
Winnie Comstock-Carlson President and Publisher
August 2022 | comstocksmag . com 13