January 18, 2022- Bansree Parikh, President, Bank of America Inland Empire, Sr. Vice President and Jimmy Sanchez, Private Bank Investment Executive, Bank of America-Hybrid meeting In-person & via Zoom -via ZOOM

Tuesday, January 18, 2022

Hybrid Meeting In-Person and via ZOOM


Present:  Deborah Barmack, Peter Barmack, Carole Beswick, Greg Bradbard, Mike Burrows, Michelle Decker, Kevin Dyerly, Louis Goodwin, T. Milford Harrison, Mark Kaenel, Lena Kent, Lowell King, Mike Layne, Bill Lemann, Darcy McNaboe, John Mirau, Tomas Morales, Bansree Parikh, Catherine Pritchett, Karen Richmond, Michael Rivera, Dan Roberts, Dan Schenkel, Kristine Scott, Paul Shimoff, Eric Ustation, Pete Van Helden, Reggie Webb, Ray Wolfe, Marisa Yeager and Frank Zabaleta.

Guests: Sheriff Dicus and Jimmy Sanchez, Bank of America.

Announcements:  1) Appreciation was expressed to Ken Coate who has attended and reported back to staff on some of the virtual meetings held by the Governor’s office regarding the budget and budget surplus.  2) The SBCTA has now received the second of three DMU’s.  Testing with Metrolink trains on the Arrow service will occur on February 4th or 7th once they have crew assignments.  The zero-emission train will arrive soon.

Lowell King, Chair presiding.

Motion by R. Wolfe/Second by B. Lemann/Passed: Minutes from January 11, 2022.

Dan Schenkel introduced Bansree Parikh, President, Bank of America Inland Empire.  Bansree Parikh introduced Jimmy Sanchez, Sr. Vice President, Private Bank Investment Executive, Bank of America.

Bansree Parikh shared the results of research commissioned by Bank of America Charitable Foundation on the impact of the Latino population on the US GDP.  The data from the 2020 census reflects the Latino population in the Inland Empire has grown from 47.3% to 51.6%.  It is important to realize the economic opportunity of our changing demographics and change the narrative.

The highest population of Latinos is in 8 states and account for 76% of the entire U.S. Latino gross domestic product (GDP).  The 8 states are California, Arizona, New Mexico, Texas, New York, Florida, Illinois and New Jersey.  Together these 8 states have a combined Latino GDP of $2.0 trillion.  Treated as a unit, Latinos in these states represent the 2nd largest state GDP.  Their GDP is growing 74% faster than non-Latino GDP.  The single largest driver for this group is personal consumption.  From 2010-2018 Latino real consumption grew 135% faster than non-Latinos.  The dramatic increase is predominantly large gains in personal income, which naturally flows from their rapid gains in educational attainment and strong labor force participation.

Primary drivers of Latino personal consumption growth and therefore income growth here in California are:

Population– The non-Latino population grew by 3% compared to the Latino population which grew 13% over the same period.
Labor Force growth– From 2010-2018 California’s Latino labor force grew nearly seven times as quickly as the non-Latino labor force.  It is predicted that close to 350,000 mostly non-Latino “Baby-Boomers” will retire each month (peaking in 2022) creating a dangerous shortage of workers.  This issue will be mitigated by the growth of the Latino population.  Our country’s ability to maintain economic growth depends on the labor force.  Additionally, the median age of U.S. Latinos is 29.5 compared to 40.6 for non-Latinos thus the Latino population will have more time in the workforce.  Projections indicate that by 2060 Latinos will contribute 30 million additional working age adults.
Educational Attainment growth– Latinos earning a bachelor’s degree or higher grew 2.5 times faster than educational attainment of non-Latinos since 2011.  This has driven more private sector employment, higher paying wages, substantial participation in the workforce and higher home ownership and wealth creation.

The Inland Empire which now has a majority of Latinos stands to benefit from this growth in population, labor force and wealth creation.  As the U.S. Latino’s contribute $2.6 trillion to the U.S. GDP and are the 9th largest GDP in the world, the narrative should be about how much Latinos are creating wealth, contributing to the workforce, and contributing to society.

Jimmy Sanchez gave an update about interest rates, inflation, and Federal expectations.

2020 was all about expanding price-earnings ratio.  We had a crushing 40% plus correction in the market and by the second half of the year price-earnings ratio began to increase.  2021 was more about profits in part to recover from 2020.  2022 is expected to be focused on profit growth as we are coming out of the pandemic.  The belief is that this will be an above average economic cycle with the Fed pivoting away from the ultra-accommodating stance (dominated by many emergency programs). The Fed will lift off from the zero-interest rate policy. Dividends will return after a long absence and profit growth will be stronger than many expect.

We have not yet seen a full reopening of the market without disruption, but consumer spending will remain strong.  Equities will continue to outperform fixed income and expect high single digit returns (5-8% or in a very bullish market could be 10-15%).  It is doubtful that we will see lower valuation pressured by lower rates, reduced liquidity, or a new COVID variant causing us to shelter in place again.

Elevated inflation is of concern.  We are coming off a zero-interest rate policy and must try to figure out what interest rate can stop inflation.

Supply chain has been affected by the pandemic but these temporary bottle necks have occurred for additional factors.  The lock down of 2020 annihilated businesses in the U.S. and other countries that the U.S. relies upon.   Never before had the U.S. economy closed, and estimates reflect that some 37% of all businesses closed which is a shock to the economy.  Restaurants that closed affected food producers which effected grocery stores etc.  Manufacturers have had difficulties getting materials from other countries which have their own lock downs and labor shortages in reaction to the pandemic.

Trade logistics between the U.S and China was carefully balanced with China sending goods to the U.S. and we would use the same shipping containers to load with U.S. products and return.  This cycle worked well until the pandemic.  China lifted their restrictions much earlier than the U.S., so the U.S. didn’t have product to refill containers.  In Long Beach there are currently empty shipping containers everywhere and due to air quality restrictions. the ports are unable to grow as the purchase of all new equipment would be needed to meet air quality standards.

Just-in-time manufacturing for inventory management has kept costs down for manufacturing but now we do not have the inventory we need.

A Q & A period followed.
Meeting adjourned at 8:37 a.m.