California’s economy staging strong comeback
December 30, 2011
Although its economic recovery got off to a lackluster start, California has recently started to outpace the United States.
According to Jock O’Connell, Beacon Economics’ International Trade Adviser, current statistics clearly indicate that California is on the road to recovery, and despite reports in the popular press, the state is not headed for a second recession over the short run.
“In fact, the labor markets have made a manifest turn for the better – adding more than 2.2 percent to its nonfarm payrolls since hitting bottom in September 2010,” he said.
“In addition, this growth is occurring despite continued job losses in the government sector. Separate out private sector employment, and the state has done even better, posting 2.5 percent growth over the same period.”
O’Connell said that this equates to roughly 250,000 jobs – clearly not enough to correct the 1.3 million jobs lost during the Great Recession, but a steady move in the right direction and a far cry from another recession.
“It is also important to keep in mind that job growth is typically the last thing to turn around in a recovery, which suggests that the underlying fundamentals of the California economy are growing even faster,” said O’Connell.
Beacon Economics maintained that consumer spending is a prime example as consumers have shown steady increases in spending over the past two years almost consecutively. And while this is true both in California and the U.S., taxable sales in the Golden State have risen by more than 17 percent since their trough in the second quarter of 2009.
That compares with 15.7 percent in the U.S. overall in terms of goods purchases on a nominal basis. This extra growth in California has developed despite the fact that the state fell nearly twice as much as the nation overall (-19 percent vs. -9.7 percent) and that California hit bottom one quarter late.
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