Inflation’s impact on the price of medication has had an outsized hit on the operations at Kaweah Health in Tulare County, along with staffing problems. Kaweah Health photo.

Despite multiple areas of growth, inflation is a cause for concern across a multitude of industries. From agriculture to health care, Tulare County continuously tries to prepare for what the 2023 economy may bring.

Inflation is affecting business owners on many levels. One of the most prominent consequences of the current economy going into 2023 is higher interest rates and depleted cash reserves.

For some businesses, a line of credit or a small business loan will be the only way they stay afloat and will be able to keep the space they’re currently in, as well as employees.

“As the cost to borrow money increases it becomes more expensive to have that sort of strategy than it is to have reserves, ” said Gail Zurek, president/CEO of the Visalia Chamber of Commerce.

These changes may primarily affect small businesses going into the next year.

“Small businesses can be affected by a recession and inflation as their access to the credit market may diminish as interest rates increase and their availability to buy debt decreases,” said Zurek. “When the economy shifts and inflation takes over, there are some small businesses that are sensitive to that change in the market.”

According to the Tulare County Economic Development Corp., there were significant decreases in positions held in several industries. The most affected industries include farming, professional and business services, government, and finance and insurance. These industries in Tulare County all saw notable decreases ranging from 295 to 1,133 positions lost.

Regardless of these decreases, industrial activity in Visalia continues to grow with many projects currently underway. Job growth in this sector will be driven mainly by e-commerce and distribution, with the manufacturing and associated services sector following close behind and continuing to grow in 2023.

New developments along Mooney Avenue are also anticipated. Concentrated south of Visalia Parkway and at Sequoia Mall, as well as at Dinuba and Riggin avenues, most of these developments will be new restaurants and retail stores. It is expected that there may be one or two new hotel offerings in the works as well.

As a result of this growth, construction jobs are projected to continue to grow across these various sectors in the coming year.

Drought remains the top concern of local farmers going into 2023. More recently, that concern has grown due to the Sustainable Groundwater Management Act (SGMA).

Under SGMA, farmers are restricted to a specific amount of groundwater for irrigation. If they go over that threshold they are penalized.

With rising inflation, there is concern about how much farmers will need to dig into their pocketbooks in 2023 if the economy does not get better.

SGMA also affects farmers’ decisions to pull up old crops and replant them as their production investment return starts to decline, forcing them to prioritize what they believe will give them the best return for the next year.

“While normally we would just replant all that acreage, the decision to redevelop and plant again is really hindered by how much water they’re going to be able to pump or receive from their surface districts,” said Tricia Blattler, executive director of the Tulare County Farm Bureau.

SGMA is also causing much transition, whether it be land being sold, converted to another crop or fallowed.

“Those three scenarios are playing out over and over again, and farmers are feeling it in their wallets,” said Blattler.

The rising cost of silage for feed is another cause for concern.

According to the Tulare County Farm Bureau, the cost attributable to seed forage and silage will change 2023 because farmers may be reducing their own ability to farm silage crops for feed and may be using more of their capital to buy feed elsewhere.

“That can really change their bottom line and impact their economic solvency based on whether accessing and growing or buying their feed and forage needs from,” said Blattler.

The cost of exporting fruit and nuts has also gone up and is expected to keep increasing in 2023.

Going into 2023, hospitals are feeling the impact of inflation as the prices of medication and supplies continue to rise.

According to Gary Herbst, CEO of Kaweah Health, hospitals are struggling to acquire medical equipment and necessary materials for surgery. Everything from gloves and gowns to medical technology is getting harder to come by and is projected to continue in 2023.

One of the hospital’s most recent projects is on hold due to the unavailability of materials. The construction of a new clinic in northwest Visalia was halted due to the backorder of HVAC parts and other necessary building materials.

According to Herbst, medication is where the hospital sees the greatest amount of year-to-year inflation.

“Generally speaking, it goes up 10% to 15% every year, and yet, we might get a 2% increase from Medicare, and nothing from MediCal,” said Herbst. “When it comes to trying to negotiate the price of drugs and supplies, there just aren’t enough vendors or manufacturers out there.”

The shortages in medication and supplies are worrisome as Kaweah Health anticipates a harsh flu season in 2023. With Respiratory syncytial virus (RSV) on the rise, hospitals prepare for potential overcrowding as RSV and flu cases continue to rise in the next year.

“I do really worry about those winter viruses and how that could deplete our workforce again, and how it could overrun the hospital,” said Herbst.