LOS ANGELES — After nearly five years of brutal economic decline,
government retrenchment and a widespread loss of confidence in its
future, California is showing the first signs of a rebound. There is
evidence of job growth, economic stability, a resurgent housing market
and rising spirits in a state that was among the worst hit by the
recession.
California reported a 10.1 percent unemployment rate last month, down
from 11.5 percent in October 2011 and the lowest since February 2009. In
September, California had its biggest month-to-month drop in
unemployment in the 36 years the state has collected statistics, from
10.6 percent to 10.2 percent, though the state still has the
third-highest jobless rate in the nation.
The housing market, whose collapse in a storm of foreclosures
helped worsen the economic decline, has snapped back in many, though
not all, parts of the state. Houses are sitting on the market for a
shorter time and selling at higher prices, and new home construction is
rising. Home sales rose 25 percent in Southern California in October
compared with a year earlier.
After years of spending cuts and annual state budget deficits larger
than the entire budgets of some states, this month the independent California Legislative Analyst’s Office
projected a deficit for next year of $1.9 billion — down from $25
billion at one point — and said California might post a $1 billion
surplus in 2014, even accounting for the tendency of these projections
to vary markedly from year to year.
A reason for the change, in addition to a series of deep budget cuts in
recent years, was voter approval of Proposition 30, promoted by Gov.
Jerry Brown to raise taxes temporarily to avoid up to $6 billion in
education cuts.
“The state’s economic recovery, prior budget cuts and the additional,
temporary taxes provided by Proposition 30 have combined to bring
California to a promising moment: the possible end of a decade of acute
state budget challenges,” the report said. “Our economic and budgetary
forecast indicates that California’s leaders face a dramatically smaller
budget problem in 2013-14.”
And 38 percent of Californians say the state is heading in the right direction, according to a survey
this month by U.S.C. Dornsife/Los Angeles Times. For most places, that
figure would seem dismal. But it is double what it was 13 months ago.
California’s recovery echoes a rebound across much of the country; the
state suffered not only one of the longest downturns but also one of the
most severe. Economists say the turnaround, should it continue, is a
positive harbinger for the nation, given the size and diversity of the
state’s economy.
Democrats here have been quick to argue that the improvements in fiscal
conditions that the state is now projecting after voters approved the
temporary tax increase may embolden other states, and Congress, to raise
some taxes rather than turn to a new round of cuts.
Yet California still faces major problems. The economic recovery is
hardly uniform. Central California and the Inland Empire — the suburban
sprawl east of Los Angeles — continue to stagger under the collapse of
the construction market, and some economists wonder if they will ever
join the coastal cities on the prosperity train. Cities, most recently
San Bernardino, are facing bankruptcy, and public employee pension costs
loom as a major threat to the state budget and those of many
municipalities, including Los Angeles.
A federal report this month said that by some measures, California has the worst poverty
in the nation. The river of people coming west in search of the
economic dream, traditionally an economic and creative driver, has
slowed to a crawl.
Still, the fear among many Californians that the bottom had fallen out
appears to be fading. Economists said they were spotting many signs of
incipient growth, including a surge in rental costs in the Bay Area,
which suggests an influx of people looking for jobs.
“I think the state is turning a corner,” said Enrico Moretti, a
professor of economics at the University of California, Berkeley. He
said that the recovery was creating regional lines of economic
demarcation — “We are going to see a more and more polarized state,” he
said — but that over all, California was emerging from the recession.
Read the full story here.
Comments
Post a Comment
Thanks for leaving comments. You are making this discussion richer and more beneficial to everyone. Do not hold back.