California economy will likely be in bad shape for years to come 

Californians are worried about the state’s recession-wracked economy, recent polls have found — and with very good reason.
As the state’s once-booming housing industry went bust, the recession hit here somewhat earlier and harder than in the rest of the country. The national economy shows some signs of recovery, but they’re difficult to find in California.

The best one may conclude from forecasts by the state’s leading economists is that we may have hit bottom and may see some weak signs of recovery later in the year, but full recovery will take years.

How many years? In the absence of some new explosive boom, even a strong recovery would create, at most, perhaps 300,000 new jobs a year. That sounds great, but California is still seeing strong population growth, so its potential labor force is still growing. Most of those 300,000 jobs would be needed just to meet that growth.

California has lost 1.4 million jobs in the past two years, including 20,400 more in February. Unemployment is 12.5 percent. Cutting it in half could take a decade.

Bill Watkins, who runs an economic forecast unit at California Lutheran University, says in a new overview, “The short version of our forecast is that economic activity will slowly pick up in California, while job losses will continue, but at declining rates.”

As the recession dominates the public consciousness, it will have a heavy impact on the political climate as voters fill hundreds of political offices and decide the fate of many heavy-duty ballot measures.

Californians are clearly angry and worried about their futures. That angst could mean rough times for incumbent officeholders while changing the chemistry of ballot measure campaigns.

It could set the stage, for instance, for a ballot measure that would indirectly repeal AB 32, Gov. Arnold Schwarzenegger’s anti-global warming law that has generated strong opposition from business.

Several oil firms are spending heavily to qualify the measure, which would block AB 32’s effect until the unemployment rate drops to well under half the current rate — a condition that likely never would be met.

Meanwhile, the forecasts of years-long economic stagnation puncture hopes of Capitol politicians that a sudden economic resurgence would lift the burden of either imposing new taxes or making deep spending cuts to close the state’s unsustainable budget deficit.

There is no light yet to be seen at the end of this economic tunnel.

Dan Walters’ Sacramento Bee columns are distributed by the Scripps Howard News Service.

About The Author

Doug Graham

Pin It

Speaking of Op Eds

More by Doug Graham

Latest in California

© 2019 The San Francisco Examiner

Website powered by Foundation