Four trends to watch for in 2023
2023 will be a momentous year for Humboldt County’s economy. Here are four developments I’ll be watching.
Lots of people smarter than I have enumerated the many potentially huge projects that will affect Humboldt County over the rest of the decade. (And one dumber … you know who you are.) We’re talking about the growth of Cal Poly Humboldt, the Nordic Aquafarms project, the coming internet pipeline and data centers, and offshore wind, as notable examples. Any one of these would be large in the context of our local economy; multiples will represent nice problems to have. Those problems include workforce, housing, infrastructure, lifestyle, and environmental impacts.
The first item on my 2023 watchlist is the progress of these projects. One or two are clearly happening. I’m watching the continuing developments of the Nordic project and offshore wind intently. Nordic still could be a question of whether and when, in addition to how. With offshore wind, what happens with and because of community engagement is what most interests me as a local citizen.
Second, there will be huge impacts from the tension between inflation and interest rates. As we closed out 2022, the inflation rate was easing, which is what higher interest rate-setting was designed to cause. (To be clear, prices are still rising but less quickly than much of the past two years.) At current, however, we have both relatively high inflation and relatively high interest rates, a tough double whammy. I’m hopeful for better numbers late in the year, but in the near term — and I’m happy to be wrong — I will watch with an expectation that both rates remain high compared to 21st century history. This key unknown will continue to contribute to one of the things investors, entrepreneurs and business managers hate the most: uncertainty.
Next, we need housing. Clearly, there is a need for affordable housing, which logically occupies a lot of the public discussion. And we need what the policy wonks call “market rate” housing. In my mind, that means that my doctor and those data center engineers can find places that meet their expectations and keep them here, tending to my health and contributing to our economy. Those high interest rates are particularly punishing when it comes to financing and building homes. And, as I see in my monthly Eureka Planning Commission meetings, it means we must deal with good-againstgood issues, such as allowing small local sprawl and some environmental impacts versus not allowing those and building fewer houses and apartments.
Fourth, I’ll be following, with intense interest, where the local cannabis industry goes. It’s widely known that prices for farmers are down. Ross Gordon at the Humboldt County Growers Alliance calculated that cultivation licenses in Humboldt dropped a little less than 10% in 2022 — a significant decline, but frankly less than I would have guessed. Retail is hurting statewide, and in turn, distributors who are the ones who sell to retail aren’t always paid. Counter to almost all other prices, cannabis prices are down in the legal California market. While there will be a significant cannabis industry in California in the future, how much of it remains in Humboldt County will be a question, and I believe we’ll see the shape of that form this year. For businesses that are located here to be near the source of great cannabis, the less is grown here, the less the logic for them to stay here. (I’ll note that as someone who works at the cannabis wellness manufacturer Papa & Barkley, everything I know says we’re staying.)
If we look at things from a 10,000-foot level, Humboldt County’s economic future still looks bright. Each of those big projects listed at the top of this column is one of the most economically impactful the region will have seen in four decades. But we’re mostly not there yet with those initiatives. 2023, I predict, will be a year of muddling through.