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Local Experts Speak About State of Businesses in Pasadena, Inflation and Recession Threats

Published on Thursday, February 2, 2023 | 5:53 am

2023 could be the tipping point year for many small businesses, facing an accumulation of nagging headaches caused by inflation, labor shortages, supply chain hiccups and, possibly just ahead, a looming recession. [Shutterstock]
Many businesses in Pasadena, especially locally owned businesses, are still recovering from the impact of COVID pandemic. On this road to recovery, local businesses have had to face a roadblock; inflation rates over six percent in 2022. 

Inflation eased to 6.5%, down in December 2022 from 7.1% recorded a month earlier, but business owners are still feeling its impact. 

Locally, many businesses are struggling due to high cost of goods, a direct impact of inflation, President of Pasadena Chamber of Commerce, Paul Little said. 

Pasadena Chamber of Commerce provides services for businesses that are located in Pasadena. 

Similarly, Louis Teran from Pasadena Business Networking Association, a group of local professionals and small business owners, said businesses continue to struggle due to inflation. 

“There are still many empty offices in Pasadena. That impacts the businesses that depend on those office workers as customers,” said Little.

Teran said there are some restaurants in Pasadena that are still not up to where they were before the pandemic. “I think inflation has an impact on that.” 

Donald Loewel, Director of the Small Business Development Center at Pasadena City College (PCC), which provides high quality business and economic development assistance to small businesses and entrepreneurs, cannot say that businesses impacted by the pandemic have fully recovered. 

Loewe said aside from inflation, which will have consumers “reduce or postpone some purchases,” some businesses are still being impacted by shifting business models and labor shortages, especially in sectors like restaurant and retail. 

“I wouldn’t say they’ve made a full recovery by any means. There are quite a few new regulations and rules that small businesses need to keep across.”

Cautiously Optimistic

Teran said this year, everybody in the business community is “cautiously optimistic” due to economic uncertainties. 

He said some businesses are preparing for what is coming up and there is hesitation on making large investments.

“There’s certainly some optimism because the pandemic is over, but everybody seems to be cautious because of much of the chatter that’s going around,” Teran said, referring to talks about a looming recession. 

Economic Development Director Dave Klug said Executive Directors of local Business Improvement Districts in Pasadena relayed that small business owners are “always fearful,” of their businesses’ future amid the current economic conditions. 

“Even if business is booming their position is it can all blow up tomorrow,” Klug said. “Most of them are still in recovery from the pandemic and are feeling very precarious. A recession, or even reduced spending in fear of a recession, has them on edge.”

According to Klug, there are also concerns among the business community about consumer pull back now that the holidays are over, due to recent inflation and recession fears. 

Resilient to Economic Downturns

Klug said while many businesses do not have a specific plan if their fears are realized, they are “very determined” to succeed.

“Independent merchants are somewhat more enthusiastic as we work with them to leverage the growing residential population to help offset any slower office worker or visitor spending,” he noted. 

He cannot say if the economy is on the brink of recession but he noted that Pasadena can thrive because of its diverse economy.  

“Pasadena has a very diverse economy with multiple multi-million-dollar development projects underway that are either planned and/or happening that demonstrates Pasadena is a desirable location for commercial and residential investment.  These projects will offer employment opportunities in both the construction industry and provide opportunities for permanent employment,” Klug said. 

“Usually that diversity helps mitigate the impacts of a recession,” he stressed. 

While recession would create difficult conditions for businesses, Loewel believes the pandemic has made local businesses more resilient and much more prepared for a slowdown.

“Small businesses that found a way to adapt to Covid and now are on the road to recovery from that, surviving that journey, I think makes a recession seem a lot less formidable,” Loewel said. “After that kind of impact after Covid-19, our businesses are much more resilient and I think more prepared.” 

Little, for his part, expressed optimism, saying Pasadena has always been resilient to economic downturns.

Just like Klug, he said the city can survive due to the diversity of its business environment. 

“Small business people are amazingly resilient, strong and stubborn. They will adjust, and fight and work as hard as they can to stay open,” Little said. 

Support Local 

Little urged the city to consider another round of grants to small businesses in the city to help struggling businesses. 

“They received tens of millions from the federal government to do just that and I hope Pasadena would step up to spend those funds as intended-to support the local small businesses in our community.”

Aside from the government support, the PCC President expressed hopes residents will support businesses this year as they face uncertainties. 

“I hope their customers step up to support them. It is always important to shop in our local community, now more than ever,” Little said.

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