ARTICLE
Here's the truth about economic news: It feels like noise until, suddenly, it's your payroll, your supply order, your hiring plan. So let's cut through it together. Here's what's actually happening, and what it means for you. The National Economy Is Sending Mixed Signals Picture this. The July jobs report comes out. Unemployment ticks down. Sounds great, right? Except it's mostly because fewer people are in the workforce to begin with, as more folks retire than are coming in behind them. So it's not that jobs are booming. It's that there's less competition for the ones that exist. Prices are still climbing, just more slowly. Inflation came in at 3.4% for the year in July. And the Federal Reserve, the folks who set interest rates for the whole country, could not agree on what to do about it. They held rates steady, but the vote wasn't close to unanimous. Their next call is September 16th. Nobody should bet too confidently on which way it goes. But here's the encouraging part. Small business owners nationwide are feeling more confident than they have in almost a year. More of them are planning to hire. More of them are planning to invest. That is a real vote of confidence in where this economy is headed. Of course, there's a catch. There's always a catch. Finding good people has become their number one worry. So picture two lines on a graph, both going up at the same time: confidence, and the headache of finding workers to match it. Our Own Backyard Tells Two Stories at Once Now let's bring it home. Our unemployment rate has been running higher than the national number. Job growth countywide has been slow. Our own county's workforce report found that more than half our local jobs fall into the lowest paying tier. Add housing costs that once again place the County as the most expensive housing market in the County, and it's easy to see why so many business leaders are telling the Chamber that hiring and keeping good people is the hardest part of the job right now. And yet. People keep betting on this place. Downtown's Anton Pacific project just landed its first retail tenant. Downtown Santa Cruz is filling vacant spaces. New businesses keep registering across the county every single week, from Watsonville taquerias to Capitola creative studios. Visit Santa Cruz County just picked up statewide recognition for its work on accessibility. So both things are true at once. Real confidence from developers and entrepreneurs. Real pressure on the people who staff our storefronts and restaurants. That tension is not a flaw in our local economy. It is our local economy, and understanding it is how we build a smarter year ahead. The Rules Are Changing Under Our Feet Here's where you'll want to grab a pen. California's minimum wage climbs to $17.40 an hour on January 1st, 2027, up from $16.90. And because the exempt salary threshold is tied to that number, it's rising too, from $70,304 to $72,384 a year. If you've got salaried staff sitting near that line, now is the moment to check they still qualify. And then there's tariffs, which have genuinely changed twice since spring. In February, the Supreme Court struck down the broad tariffs the administration had put in place. The administration leaned on a different law for a temporary global surcharge. That one expired in late July, by law, and got replaced with a narrower set of tariffs on goods from about 80 countries. Meanwhile, separate tariffs on steel, aluminum, and cars never went anywhere. Bottom line? Tariffs are lower than last year's peak, but still well above where they stood before 2025. And the ground keeps shifting. If your business touches imported goods in any way, even indirectly through a supplier, do not assume last quarter's numbers still hold. So What Do You Actually Do With All This? > Build the 2027 wage and salary changes into your budget now, not in December. > Call your suppliers and ask for current pricing if imported goods are part of what you sell. > Plan your hiring timeline knowing the labor pool is tight, both nationally and right here at home. > Keep an eye on Sacramento through the end of the legislative session on August 31st. > Don't count on interest rate relief just yet. The Fed is genuinely split. Here's the thing worth remembering. None of these forces, the national economy, our local job market, Sacramento, Washington, are things any one business controls alone. But understanding them together? That's an important part of why we come together as a Chamber in the first place. We'll keep digging into what all this means for our local businesses community specifically, including at our upcoming Advocacy 101 Luncheon with Peter Kellison from Clear Advocacy. The Chamber is here to help you make sense of it all, and to make sure our business community has a seat at the table wherever and whenever these decisions get made.
Here's the truth about economic news: It feels like noise until, suddenly, it's your payroll, your supply order, your hiring plan. So let's cut through it together. Here's what's actually happening, and what it means for you.
The National Economy Is Sending Mixed Signals
Picture this. The July jobs report comes out. Unemployment ticks down. Sounds great, right? Except it's mostly because fewer people are in the workforce to begin with, as more folks retire than are coming in behind them. So it's not that jobs are booming. It's that there's less competition for the ones that exist.
Prices are still climbing, just more slowly. Inflation came in at 3.4% for the year in July. And the Federal Reserve, the folks who set interest rates for the whole country, could not agree on what to do about it. They held rates steady, but the vote wasn't close to unanimous. Their next call is September 16th. Nobody should bet too confidently on which way it goes.
But here's the encouraging part. Small business owners nationwide are feeling more confident than they have in almost a year. More of them are planning to hire. More of them are planning to invest. That is a real vote of confidence in where this economy is headed.
Of course, there's a catch. There's always a catch. Finding good people has become their number one worry. So picture two lines on a graph, both going up at the same time: confidence, and the headache of finding workers to match it.
Our Own Backyard Tells Two Stories at Once
Now let's bring it home. Our unemployment rate has been running higher than the national number. Job growth countywide has been slow. Our own county's workforce report found that more than half our local jobs fall into the lowest paying tier. Add housing costs that once again place the County as the most expensive housing market in the County, and it's easy to see why so many business leaders are telling the Chamber that hiring and keeping good people is the hardest part of the job right now.
And yet. People keep betting on this place. Downtown's Anton Pacific project just landed its first retail tenant. Downtown Santa Cruz is filling vacant spaces. New businesses keep registering across the county every single week, from Watsonville taquerias to Capitola creative studios. Visit Santa Cruz County just picked up statewide recognition for its work on accessibility.
So both things are true at once. Real confidence from developers and entrepreneurs. Real pressure on the people who staff our storefronts and restaurants. That tension is not a flaw in our local economy. It is our local economy, and understanding it is how we build a smarter year ahead.
The Rules Are Changing Under Our Feet
Here's where you'll want to grab a pen.
California's minimum wage climbs to $17.40 an hour on January 1st, 2027, up from $16.90. And because the exempt salary threshold is tied to that number, it's rising too, from $70,304 to $72,384 a year. If you've got salaried staff sitting near that line, now is the moment to check they still qualify.
And then there's tariffs, which have genuinely changed twice since spring. In February, the Supreme Court struck down the broad tariffs the administration had put in place. The administration leaned on a different law for a temporary global surcharge. That one expired in late July, by law, and got replaced with a narrower set of tariffs on goods from about 80 countries. Meanwhile, separate tariffs on steel, aluminum, and cars never went anywhere.
Bottom line? Tariffs are lower than last year's peak, but still well above where they stood before 2025. And the ground keeps shifting. If your business touches imported goods in any way, even indirectly through a supplier, do not assume last quarter's numbers still hold.
So What Do You Actually Do With All This?
> Build the 2027 wage and salary changes into your budget now, not in December.
> Call your suppliers and ask for current pricing if imported goods are part of what you sell.
> Plan your hiring timeline knowing the labor pool is tight, both nationally and right here at home.
> Keep an eye on Sacramento through the end of the legislative session on August 31st.
> Don't count on interest rate relief just yet. The Fed is genuinely split.
Here's the thing worth remembering. None of these forces, the national economy, our local job market, Sacramento, Washington, are things any one business controls alone. But understanding them together? That's an important part of why we come together as a Chamber in the first place. We'll keep digging into what all this means for our local businesses community specifically, including at our upcoming Advocacy 101 Luncheon with Peter Kellison from Clear Advocacy.
The Chamber is here to help you make sense of it all, and to make sure our business community has a seat at the table wherever and whenever these decisions get made.