More on the California Economy
Wednesday's news was filled with lots of stories on the latest California Economic Forecast. The SacBee (click here for link) notes that the recession will end this year, but according to the two major economic forecasts:
"...the cutbacks in state and local government, along with the continuing fallout from the mortgage meltdown, will make 2010 feel like another year of recession..."
The story goes on to note that at least 24,000 government jobs have been eliminated with many more to come.
The article in the San Francisco Chronicle (click here for link) focuses on the longer view, and notes that this recession could mark a fundamental change in consumer behavior. It points out:
"...Both forecasts characterized California as the epicenter of back-to-back consumption binges fueled by the dot-com boom and the housing bubble, and argued that now the state faces big adjustments as it recovers from ills that have long plagued the U.S. economy.
"Consumers have been on a spending binge ever since 1995," said Jon Haveman with Beacon Economics, as soaring 401(k)s and, later, inflated home prices made Americans feel so wealthy they stopped saving money.
"California is different from the rest of the United States in the magnitude of all this," said Jerry Nickelsburg with UCLA Anderson, as people here exemplified the bad American habit of borrowing to spend.
"Now the easy-money days are over, the inflated asset values are gone, the home equity boom is over and people are going to have to save more, which means less consumption and slower growth," Nickelsburg said..."
The article goes on to point out:
"...Ed Leamer, director of the UCLA Anderson Forecast, said consumers usually roar back from recessions with spending that lifts production and fuels hiring, but he thinks that is unlikely during this recovery because Americans have been living beyond their means for too long - borrowing too much and importing more than the country sells abroad.
"We need to turn our shopping malls into factories," Leamer said "Our economy over the next decade is going to have to build more of the stuff we buy."
Haveman said the painful adjustments now under way should eventually benefit California and the Bay Area, which lead in technology, biotechnology, clean energy and other cutting-edge industries..."
While this may be good news for our economy in the long run, it could create additional challenges for local governments (such as Manteca) that are heavily dependent on consumer spending to fuel our local budgets via sales tax.
"...the cutbacks in state and local government, along with the continuing fallout from the mortgage meltdown, will make 2010 feel like another year of recession..."
The story goes on to note that at least 24,000 government jobs have been eliminated with many more to come.
The article in the San Francisco Chronicle (click here for link) focuses on the longer view, and notes that this recession could mark a fundamental change in consumer behavior. It points out:
"...Both forecasts characterized California as the epicenter of back-to-back consumption binges fueled by the dot-com boom and the housing bubble, and argued that now the state faces big adjustments as it recovers from ills that have long plagued the U.S. economy.
"Consumers have been on a spending binge ever since 1995," said Jon Haveman with Beacon Economics, as soaring 401(k)s and, later, inflated home prices made Americans feel so wealthy they stopped saving money.
"California is different from the rest of the United States in the magnitude of all this," said Jerry Nickelsburg with UCLA Anderson, as people here exemplified the bad American habit of borrowing to spend.
"Now the easy-money days are over, the inflated asset values are gone, the home equity boom is over and people are going to have to save more, which means less consumption and slower growth," Nickelsburg said..."
The article goes on to point out:
"...Ed Leamer, director of the UCLA Anderson Forecast, said consumers usually roar back from recessions with spending that lifts production and fuels hiring, but he thinks that is unlikely during this recovery because Americans have been living beyond their means for too long - borrowing too much and importing more than the country sells abroad.
"We need to turn our shopping malls into factories," Leamer said "Our economy over the next decade is going to have to build more of the stuff we buy."
Haveman said the painful adjustments now under way should eventually benefit California and the Bay Area, which lead in technology, biotechnology, clean energy and other cutting-edge industries..."
While this may be good news for our economy in the long run, it could create additional challenges for local governments (such as Manteca) that are heavily dependent on consumer spending to fuel our local budgets via sales tax.
Labels: Economy
posted by City Manager @ 7:36 AM
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