Category Archives: Economy

New Innovation Coming to Sacramento

The City of Sacramento announced a partnership with Berkeley SkyDeck, the startup accelerator program from the University of California (“UC”) Berkeley. Through this cooperation, SkyDeck will introduce seven startup companies to Sacramento to pursue investment and advancement opportunities.

SkyDeck accelerator to work with City of Sacramento

SkyDeck will work with the Sacramento Urban Technology Lab (SUTL) to navigate the city’s business landscape, aiming to establish new, local, high-paying jobs.

When SUTL launched in 2018, it focused on developing, piloting, and growing technology in the city environment. According to the agreement, Berkeley SkyDeck will refer program alumni to the city at no cost. All of the founders of SkyDeck are alumni of one of the UC campuses. Startups accepted to the program go through a rigorous screening process.

From California to…Texas?

Many companies have relocated from California to Texas in the past few years. The drawbacks of running a California-based business include hefty taxes, numerous regulations and the high cost-of-living.

In contrast, Texas is a less expensive, but thriving state, and offers plenty of space for companies.

Key companies that have moved to Texas in the past few years include Toyota, who opened their North American headquarters in Plano. McKesson, the largest US pharmaceutical distributor, moved from San Franciso to Irving, TX. Other companies that have moved from California to Texas include Jamba Juice, Jacobs Engineering, Kubota Tractor and Pegasus Foods.

The effect on the California economy depends on many variables, including if other companies take the place of those that move.

2018: Economy in Review

2019 began with good economic news in California: 24,500 jobs were added as the year ended in December 2018.

The state added 24,500 net new positions for a total of approximately 17.28 million jobs, according to the California Employment Development Department.

California’s gains were widespread, with the expansion of nine out of eleven industries. Leisure and hospitality added the most jobs, reflecting the Golden State’s historic allure as a tourist destination, particularly during the cold winter months.

Tourism has been growing and has steadily increased over the past eight years. Los Angeles County alone hosted an estimated fifty million visitors in 2018. This impressive statistic reflects a 3.1% improvement over 2017’s total.

California: Next Step

Even though right now California’s economy is thriving, caution must be employed.  According to Governor Jerry Brown, there is likely to be “an inevitable downturn” of which his Sacramento successor must be aware.  At the recent Stanford Institute for Economic Policy Research forum held last week, he warned:

“Don’t be too exuberant. Get everybody ready. The economy is a cycle, and right now we’re at the peak. But you can’t be at the peak forever.”

There has been much change in California in Brown’s time of serving (he served twice in the 1970s and 80s and twice in this decade), with a population expansion today reaching 40 million.  That of course will heavily impact the region, most particularly in housing and environment.

In other words with more people comes a change in the way we live, Brown said at the forum entitled What’s Next for California.

Sales Tax

In a recent attempt to increase sales tax in Sacramento, Measure U (which renews a half-cent sales tax and adds another half-cent tax, while rendering the total amount, concretizing the total) was passed.  Over half of voters (55.6%) in the city said yes to the hike in tax to 8.75 percent.

Of this, Mayor Darrell Steinberg said:

“We’ll do it right. We’ll do it in a thorough way and we’ll do it in a way that will make people say ‘Wow, they really meant what they said.’…Measure U is a once-in-a-generation opportunity to invest real resources in building a modern economy in Sacramento that includes everyone.”

The change in law will come into affect on April 1 and the extra money will be used to basic necessary services such as fire, police, funding for affordable housing and neighborhood projects.

Strength of California’s Economy

Federal data has just reported that the economy in California is now larger than that of the UK, placing it in position #5 worldwide.  Today, GDP in California is more than $2.7 trillion having increased by a staggering $127 billion from 2016 to 2017.  The UK did not experience this kind of growth during this time frame and in fact encountered a slight loss.

According to California State University Channel Islands Economics Professor Sung Won Sohn:

“We have the entrepreneurial spirit in the state, and that attracts a lot of talent and money. And that’s why, despite high taxes and cumbersome government regulations, more people are coming into the state to join the parade.”

The main industries that contributed to growth were: fiscal services and real estate ($26bn), IT ($20bn), manufacturing ($10 bn).  Apart from agriculture, all sectors provided growth and GDP contributions.

Also of note is that the UK has 25 million more people than California but now has a smaller GDP.

Formidable Folsom!

Folsom is becoming known these days as one of Sacramento County’s most attractive communities to make home.  Thanks to Intel Corp a rather noteworthy site appeared in the sky via drones which then disappeared quickly thereafter.

Folsom has gone from old stone prison noteworthy to super cool tech noteworthy and residents were awe-struck by what some described as looking like a TV in the sky!  This “scene” was part of a practice that Intel Corp. often engages in Folsom.  As well, they featured in Sochi’s Winter Olympics and the 2018 Coachella Music Festival.

According to Roger Gaylord, a member of the Folsom Council:

 “I think it adds a certain level of innovation within the Sacramento Region. Intel is a great example of pushing the bar and pushing the limit on something that’s just out-of-the-box thinking.”

Super Sacramento Start-Ups

Sacramento really is becoming one of the top places for start-ups, technological firms and more. not only are they starting there, they are also succeeding and thriving.

One example is the SupportPay CEO and founder, Sheri Atwood who was recently ranked #5 in the “50 Women in Tech Dominating Silicon Valley. ” Her beginnings were humble. She began her journey while assembling an expense report for Symantec. During this she began wondering how it could possibly be used to benefit the problem she was encountering with child support. At that point she left her position at the firm (where she was a Vice President), learned how to code and began developing her app. Within less than 12 months she had her first 100 users and was able to identify the features that were most needed along with an ideal price point.

Very soon, Atwood realized that there were a lot of divorcees who would gladly pay if they could get their childhood affairs automated by a program. Unfortunately, other VC’s with her were doubtful about this so set a standard monthly price of $9.99. This pushed back the program, with funds decreasing. Atwood then realized she needed an investor. Luckily it seemed that at just that point she was in the right place at the right time. Two of Silicon’s most established players Marc Benioff and Tim Draper put up the $100k investment. Since that moment, SupportPay has managed to raise $4m and are now in Sacramento!

Sacramento Workers More Optimistic

With the new US President it seems a lot of workers in Sacramento are feeling optimistic.  They believe – according to a new report – that Trump will be “good for the regional economy.” And so far there is potential evidence of this already in the works.  According to San Francisco’s Federal Reserve Bank CEO and President, John C. Williams, there has already been a significant enhancement to Sacramento’s labor market, with an additional 120,000 jobs in the metro area since 2010, following the housing crash, recession and high unemployment rate.  Today unemployment stands at almost 5 percent (less than half of what it was back in 2010).

This optimism most definitely fits in with Sacramento City’s pledge last August to become a Fab City. This 50-year-commitment renders the city the first of its kind on the Pacific West Coast to honor the MIT-spearheaded proposal, the Fab City Initiative. This means (according to its description) it will be a “new urban model for locally productive and globally connected, self-sufficient cities.” If successful, Sacramento will create for itself a micro-economy that can be sustained locally, which will render it independent from economic challenges nationwide.

Citizens will be able to produce what they consume, focusing substantially more (if not completely) on its own home-grown food, etc., enhancing its very own economy.