DECLINISTS DISAPPOINTED AS STATE ECONOMY BACK TO THRIVING, MOSTLY

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, OCTOBER 8, 2013, OR THEREAFTER

BY THOMAS D. ELIAS

          “DECLINISTS DISAPPOINTED AS STATE ECONOMY BACK TO THRIVING, MOSTLY”

          For most of the last five years, the pessimists Gov. Jerry Brown likes to call “declinists” were out in force, shouting to everyone who would listen that California’s best days are behind it, that Texas is the place to go. Some of them even profited from such moves, working as business relocation consultants.

          But they’ve been oddly silent lately. For good times are starting to roll again in the Golden State. Even in manufacturing, where the carmaker Mercedes Benz this summer leased nearly 1.1 million square feet of a former airplane plant in Long Beach that had been shuttered about seven years.

          The Eastern food franchise Dunkin’ Donuts will open 45 stores in California soon, creating about 1,000 jobs. Amazon’s new distribution centers in Patterson, Tracy and San Bernardino will hire at least 1,000 more workers than they already have. The same company just leased 75,000 square feet of office space in Santa Monica for its new television and movie production company, not saying how many workers it will hire.

    That’s just up the street from a new Microsoft research facility and only a few miles from where Google has renovated a large building in the Venice district of Los Angeles, increasing the credibility of the so-called Silicon Beach area in western Los Angeles County, where YouTube and Yahoo, among others, already had large presences.

          The declinists just two years ago seemed pleased when California’s economy slipped to tenth place in the world from its longtime position as No. 8, surpassed by Italy and Russia. But the Palo Alto-based Center for the Continuing Study of the California Economy now predicts California will be back to No. 8 by year’s end.

          No, it’s not likely the state will soon get back to No. 6 in the world again, as it was in 2000. That’s less because of failings here than due to the fast emergence of China and Brazil, both of which dwarf California in size, population and natural resources and were downtrodden until fairly recently. The outputs of both those economies surpassed California’s in the early 2000s.

    Even lobbyists for California businesses which have long chafed in California’s relatively strict regulatory climate seem happy these days.

    “California is now in the mix for the next round of manufacturing investments,” Jack Stewart, president of the California Manufacturers & Technology Assn., said during the summer, just after Brown signed bills exempting manufacturing equipment from sales taxes and providing credits for businesses in areas with the highest unemployment and poverty.

          The business lobby had pushed for the sales tax exemption for 10 years, since a previous one expired.

          And yet, all is not completely hunky-dory. California still loses the occasional business or event, one recent example being the X-Games, which essentially outgrew the Los Angeles facilities where it has been staged. Unemployment, although down almost one-third from two years ago, remained at almost 8 percent through the summer, even though California’s job growth was among the highest in the nation, with the federal Bureau of Labor Statistics reporting increases in all of the state’s 26 largest counties.

          So there still has not been full recovery from the Great Recession of 2008-11. Home foreclosures are down from their peak levels of three years ago, but remain higher than previous norms.

          And while the state has more millionaires than any other, with the accompanying mega-mansions, only 44 percent of residents are now able to afford a median-priced California home, priced at $428,510 in June. That’s down from 56 percent a year earlier, when prices were much lower.

          Good for sellers, awful for buyers, especially first-time buyers, and a possible indicator that the mercurial real estate price rises of the last few months, with their accompanying spate of all-cash offers, may signal a future bust.

          And poverty continues to be problematic in high-unemployment areas, especially those in the Central Valley. Merced County, for one example, had some job growth, but one-fourth of all households there remain below the federal poverty line of $23,550 income for a family of four.

          All of which means things are looking up in many industries and for California in general, but there’s still room for plenty of improvement.

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     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.