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California’s population dropped for the third year in a row as the state deals with the impacts of the coronavirus, rising housing cost, and lower immigration. San Francisco has been one of the most impacted cities with the city’s population at the lowest levels since 2012. The city has seen an exodus of people after years of population growth due to the tech boom. It is likely we are at the end of California’s growth era and population growth will settle much lower than it has in the past. This could hamper tech companies’ ability to attract top quality local talent as new workers entering the labor force could choose to work in less expensive metropolitan cities or choose to work remotely. With many of the largest Silicon Valley companies laying off thousands of workers the population crisis could be get worse as job opportunities within the state become less attractive. 

UMG is on the attack with CEO Lucian Grainge demanding change from the top music streaming platforms. Grainge blasted these streaming platform’s use of algorithms to lure listeners into generic or low-quality music that is less expensive for the platform to license. Grainge is demanding a change in streaming compensation and for platforms to get rid of or deprioritize “white noise” songs that take listening share from the top artists on the platform. UMG believes that great music is being drown on these platforms with too much low-quality content on the platform that diverts users’ attention from quality content. For UMG this is an obvious ploy to extract more revenue from their partner platforms while making it easier to promote new artists in a much less competitive streaming market. In a world in which the streaming platforms deny/reduce low quality content the economics begin to massively favor the major labels as major artists will command a larger percentage of streams, thus the labels will be able to negotiate better terms with the platforms. This scenario would make it far more difficult for platforms such as Spotify to meet their long-term targets and generate attractive returns on capital.

More Americans are living paycheck to paycheck with the country’s highest earners accounting for most of the new growth. An estimated 64% of U.S consumers are living paycheck to paycheck, an increase of 3% from last year (9.3 million Americans). Out of those 9.3 million, 8 million were earning more than $100,000 per year. These numbers show the toll that rising inflation and the draw down in pandemic savings are having on all Americans. Other factors such as lower stock prices and declining home values might exacerbate these problems further potentially eroding consumer wealth and spending for the next few years. Inflation-adjusted disposable income remains below pre-pandemic levels spelling trouble for many companies who rely on discretionary spending. While the shares of many of these companies have declined in 2022-2023, we could be headed to a weaker macro environment than expected that will make it difficult for these companies to meet internal and analyst expectations.