Weather has impact on the economy

Pasadena Star News

By: Cynthia Kurtz

Posted 2/13/2014 

January’s new jobs numbers were disappointing. Just 113,000 of the 175,000 projected jobs actually materialized. That is a letdown, especially after the private sector job growth for 2013 averaged 191,000 new jobs per month. And it was well below what is needed to provide employment for even new entrees into the workforce, let alone reduce unemployment.

Especially hard hit were auto and light-truck sales. Ford, General Motors and Toyota all reported declining January sales with Ford suffering a 14 percent drop. Only Chrysler continued to see growth with January sales up 8 percent.

After a strong fourth quarter in 2013, manufacturing experienced a slowdown as well in fabricated metal, petroleum and coal, and plastic and rubber products.

Retail sales reports for January come out tomorrow, but market watchers are predicting a drop in sales. Why the slowdown? What happened to the enthusiasm we saw as 2014 began?\

There are lots of theories. Quantitative easing, Washington’s continued bickering over the debt ceiling and immigration reform. Even Obamacare.

But the one reason that keeps creeping into many reports is “bad weather.” Really? Granted, we have all been willing at times to make do rather than brave bad weather. Test driving a car in a storm doesn’t sound like a good idea. Still, I wondered if lots of individual decisions to keep feet dry could really add up to an economic slowdown. 

I went looking for empirical evidence. I found it in a surprising place - an analytical arm of a property and causality insurance company which studies risk - ISO. Their March 2010 study “How Weather Influences the Economy” by Cecilia Szeand and Paul Walsh concluded there is a very direct and significant relationship between weather and the economy. In fact, they believe as much as 30 percent of the gross domestic product is affected by weather.

But it isn’t as easy as identifying bad weather with slow growth. Location plays a big role as well. Snow in Big Bear, California and snow in Atlanta, Georgia prompt very different consumer responses. Hot weather in the San Gabriel Valley and hot weather in Seattle aren’t the same.

Consumer demand is not the only economic factor influenced by weather. Local weather can affect commodity supplies such as losing a citrus crop or having insufficient water for farming. Weather interrupts supply chains by slowing or shutting down transportation systems. Power outages from severe heat or ice storms can cause production impacts. 

Impacts from weather - are they reality or a scape goat? Over the long term it is difficult to say. Some economic activity is permanently lost, but some of the reduced consumer spending will shift to future nicer days. Even storm cleanup and new construction can create jobs and offset previous losses. 

But there is little doubt that January 2014’s record-breaking weather did have a negative impact on the pace of the economic recovery. Let’s hope for some precipitation in the west and warmer temperatures in the east to get us back on track.

You can turn adversity into advantage

Pasadena Star News

By: Cynthia Kurtz

Posted 2/05/2014

It happens to everyone. You are moving along and life throws a curveball at you. I am not talking about having too much work or a day when things keep going wrong. I am talking about the times when it feels like the bottom has fallen out of your world. 

It is frightening, it is stressful, and you probably think about giving up. Rather than beating you down, there is a lot of evidence that adversity offers opportunities for growth. Tackling tough problems can develop your leadership and life skills. 

Last week David Schechtman of Tru Progress Consulting told members of the San Gabriel Valley Economic Partnership why adversity can be your “new best friend.” David sites the work of the Center for Creative Leadership (CCL) as evidence. 

If you don’t know about CCL you might want to check them out. They are consistently ranked as one of the leaders in executive education and leadership development. Their work is based on extensive research and draws on the experiences of tens of thousands of leaders and organizations. 

When CCL asked accomplished leaders what was important in their own development, three answers stood out. Important relationships. That makes sense. Role models and mentors are important. Big assignments. Of course adding responsibilities builds confidence. But the most important experience cited by both men and women was facing hardships. 

Facing hardships isn’t automatic. Our instinct is to turn inward and hide. That response will not lead to growth. Instead, David counsels his clients to take charge, crack open that protective shell and leap into your heroic self. 

What does that mean to us mere mortals?

Taking charge doesn’t mean being in control of the situation or giving orders to others. It means taking charge of you. It means accepting that bad things happen, producing the self-determination you’re going to need to keep going, and not expecting someone to come to your rescue. 

Cracking your protective shell means embracing change and being open to learning. Situations are never going to be exactly the same. Make time to be reflective about what that means to you and to those you care about especially family, colleagues, employees and customers. 

Leaping into your heroic self means being willing to take risks – risk of change, risk of making mistakes, risk of failure.

Maybe you aren’t quite ready to make adversity your bff but clearly facing hardships offers lessons you can’t learn any other way.

I think now I understand why the Mandarin word for “crisis” means both “danger” and “opportunity.” We will face adversity in our personal and professional lives. It is our choice how we face it.

California, Norway face similar, tough issues

Pasadena Star News

By: Cynthia Kurtz

Posted 1/23/2014

Recently, I was one of a small band of Southern Californians who headed to lands north of the Arctic Circle in search of the northern lights. No matter how long you plan or how much cold you are willing to endure, there is no guarantee you will see the lights. We were fortunate. After four days of watching and waiting, the green curtain appeared and danced across the sky. It is a sight I will never forget.

Travel always includes so much more than you expected and Norway was no exception. This year the country that invented the cheese slicer is celebrating its 200th anniversary of their constitution. After years of rule by Sweden and Denmark, Norway became independent in the early 20th 

century.

Not having their own line of monarchs to call on, the Norwegians elected Prince Carl of Denmark as King. Even so, Norway has never really trusted the other European countries. Several votes to join the Euro zone have failed and Norway remains one of the two Nordic countries which have not joined the EU. The Krone is still the national currency.

The economy of Norway is an amazing story. It was a relatively poor country based on fishing and ship-building until the mid-1970. Then the discovery of off-shore oil and gas reserves transformed everything.  Wages went up, unemployment went down and the already extensive social welfare system was expanded. 

Today Norway remains one of the world's largest oil exporters. Twenty percent of the country's gross domestic product (GDP) is from oil and gas. Showing its independence again, Norway decided to stay out of OPEC and keep its energy prices in line with world markets.

A rapidly expanding economy creates challenges as well as benefits.   Norway is one of the most expensive countries in the world. While not a problem for the locals based on their salaries, a traveler may be shocked by a $30 hamburger. 

As I was learning Norway's story I was struck with two things that made me think about California and the SGV. First, because things have been so good in Norway, there has been little incentive in the last 40 years to develop new industries. Even though 42 percent of the oil reserves are still to be extracted, local and national governments realize this is not sustainable. They are beginning to look for other private sector growth that will replace the energy sector in the future.

We face similar issues with the loss of manufacturing, filming and other industry sectors that have historically been important to our economy. We want to do what we can to keep and grow them here. But it is really difficult to hold on to a declining or fleeing industry sector. Equally important is identifying where our future economic growth and jobs will be and putting in place the support systems they need to sustain our future.

Second, learning English is mandatory in Norway starting in kindergarten. Many people speak additional languages. They respect and retain their culture but give their youth the tools to participate in the global economy. I think we would all agree that our youth deserve the same opportunities.

Tax credits target California businesses

Pasadena Star News
By: Cynthia Kurtz
Posted: 1/08/2014

Many states have been trying blatantly to woo California’s businesses but now California is ready to fight back. January 1 marks the beginning of the California Compete Tax Credit Program which will reward businesses that add or move jobs into the state.

$30 millions of tax credits are available this year to reduce business income and franchise taxes for eligible companies. That number grows to $150 million in fiscal year 2014-15 and $200 million in 2015-16 and 2016-17. 

The Program is being administered by GO-Biz, the Governor’s Office of Business and Economic Development. The program was designed to give GO-Biz flexibility so the credits can be allocated to best meet a regional or statewide need. 

Go-Biz has the ability to negotiate the amount of tax credit a business can receive based on the overall economic impact for California. That means they will consider factors such as the number of jobs, employee wages, the extent of unemployment where the business is locating or expanding, and opportunity for future growth.

In order to assure the credits are maximizing the benefits to the state, region or locality the “California Compete Tax Credit Committee” will have ultimate approval. That Committee is composed of the State Treasurer, the Director of the Department of Finance, the Director of Go-Biz, one appointee of the Senate and one appointee of the Assembly.

The tax credit isn’t just for big businesses. Recognizing that most new jobs come from small businesses, the state allocated 25 percent of the credit available in any year for small businesses.

While a tax credit can’t be used to reduce an individual company’s taxes below the minimum tax, the credits can be carried over to reduce taxes for up to five years.

The state Franchise Tax Board has the responsibility of assuring compliance and will review the records of all large businesses which are allocated a tax credit by GO-Biz. For small businesses, the Tax Board’s review will be on an as-needed basis.

I know there are San Gabriel Valley businesses that are planning to expand in the next few years. Some of these businesses haven’t yet decided whether to expand here or in another state. This is the program designed to keep you and your expansion here. 

Applications will be accepted during the first quarter of 2014. Information is available on the Go-Biz website. The Business Development team at the San Gabriel Valley Economic Partnership is also ready and eager to help get you more information. 

So take that Texas. California is open for business.

Parade, events generate magic

Pasadena Star News
By: Cynthia Kurtz
Posted 1/01/2014

On January 1, 2014, the Pasadena Tournament of Roses holds its 125th Rose Parade with theme “Dreams Come True” with Grand Marshall Vin Scully. Following will be the 100th Rose Bowl Game. This is the perfect time to thank the Tournament for their contributions to our region’s identity, economy and fun.
 

In 1890, the members of the Valley Hunt Club voted to hold a parade. They would decorate their horses and buggies with flowers. The parade would be followed with a variety of games - tug of war, jousts, and foot races.   

2,000 people came out to enjoy the New Year’s activities. Blooming flowers and being able to hold outdoor games on January 1 - in the middle of winter - was a great reason for the Indiana Colony settlers to celebrate. 

The following year music was added to the parade when the Monrovia Town Band performed for the crowd. Then came viewing stands and the crowds grew. 

In 1895, the Valley Hunt Club decided the parade had become too big for them to handle and the Tournament of Roses Association was formed to manage the festivities.  

In 125 years, it has only rained on the parade 10 times. Some credit divine intervention because of an 1893 decision to never hold the parade on Sunday. Sunday parades would interfere with folks going to church. So, when New Year’s Day fell on a Sunday, the parade would be held on Monday. The “never on Sunday” tradition continues today.  

In 1900, the parade was captured on film for the first time. In the following months, audiences across the United States had front row seats for the New Year’s Parade and viewers began to promise themselves to “someday” see it live. Today the Rose Parade is viewed by 84 million people in 220 territories and countries. An estimated 700,000 people line the parade route each year.   

We can’t imagine New Year’s Day without football. It all began with a game on January 1, 1902. 8,500 people showed up for the 1,000 available seats in the “town lot”- known today as Tournament Park on the Caltech campus. The University of Michigan beat Stanford University 49 - 0.    

Maybe it was the overwhelming large crowd or maybe it was the lopsided score but football was dropped in favor of other sports. A chariot race in 1904. It was exciting but dangerous. An elephant-camel race in 1913.The elephant won.  

In 1916, football returned and in 1922 the game was moved to the newly constructed “horse-shoe shaped” stadium in the Arroyo Seco with seating for 57,000 - the Rose Bowl. Today we still celebrate the Grand Daddy of them all in the Rose Bowl on New Year’s day.