OCT 2014 – PRESIDENT’S ARTICLE BY GEOFF BONNEY
Lately I h
ave not heard a lot discussion about the state of the California economy, Are we recovering, holding steady, or backsliding? I decided to do a little digging, and here is what I found.
The short answer is – we are getting better. We are not as well off as we were 7 years ago just before the housing market bubble burst, but we’re getting there. Here are some numbers on two key indicators, GDP and unemployment.
First off, I should note that California is now the 8th largest economy in the world, surpassing Italy and Russia. I guess that means Governor Brown can take a place at the G8 conference table (now that’s and interesting thought). For comparison, Texas comes in at 14th, and New York at 16th. So in spite of industries looking to locate or expand in other states, we are still experiencing some economic growth. A couple of key industries driving this are shipping through our sea ports like Los Angeles and Long Beach, and agriculture. It’s a lot further to Houston from Asia, so that one is not likely to move out of state soon. Agriculture, however, has other vulnerabilities to consider such as the drought. Although agriculture represents about 2.5% of the state economy on the surface, the trickle-down impact is much larger. My brown front lawn is no longer a big deal.
Another popular economic indicator is unemployment. State wide it is currently on a down trend, coming in at 7.4%. This is good, but we have to remember that it is higher than in 2007, and still higher than the U.S. average of 6.1%. We appear to still be in the midst of a roller coaster ride on this statistic. Here in the IE, we are coming in at 8.2% for San Bernardino County, and 9.2% for Riverside County. Similar to the state level, these number reflect a downward trend, but still larger than 2007. For comparison, Texas comes in at 5.3%, and New York at 6.4%.
The IE is taking a larger hit than the rest of the state. Ten or so years ago we were supposed to lead the nation in growth, primarily because of cheap land. We fell harder than other areas, so we have a longer climb back up. But there is a sign of success. State wide, the IE leads in property value increase of existing homes; 20% for San Bernardino County and 14.5% for Riverside County. The next best is LA County at 11.2%.
I’ll stop with the number here, since my purpose is to provide a broad, general picture. GDP is up, unemployment down. There is plenty more information out there if you want to really dig into the statistics. Overall it appears we are on a good course. One very important message is that past lessons have taught us that the economy is fragile, so we MUST NOT get complacent.