California economy unwraps gifts of good & bad job news
Consumer spending of some goods was up only 0.7 Oct-Dec this year. (Photo Credit: Clotee Pridgen Allochuku/Flickr)
The end of the year is approaching and the economic stories over the past few days have been like those gifts you unwrapped recently--some you love and some you wish you could give back. Let's give the rundown on what the California economy received:
The Furby (or Whatever the Popular Toy of the Year Is): California marked a big milestone when its unemployment rate dropped below 10 percent, hitting 9.8, with retail and self-employment jobs making big gains.
Lump of Coal: That was followed by news Chevron would move 800 jobs from their San Ramon HQ to Texas, mostly information and energy tech positions.
Expensive Electronic Gadget: UC economists dropped possible effects of California's latest environmental laws into a computer model and it spit out that California could generate 400,000 new green jobs because of the new regs.
Chocolate, the good kind: A global solar manufacturer fired up its new San Diego facility into production, making concentrator photovoltaic (CPV) modules. The company and the city benefited from San Diego's Enterprise Zone expansion when Soitec chose the San Diego location last year.
The Mystery Gift: Everyone is still waiting for a fiscal cliff deal to be made in Washington and everyone is making their opinion about the economic effect of the fiscal cliff on the California economy known. The mere lack of a deal might be having negative economic effects.
"We certainly urge our friends and representatives in Washington to understand that California--we're 15 percent of country's economy," said Kish Rajan, director of the Governor's Office of Business and Economic Development or GO-Biz. "We're a critical state and the decisions that they make in Washington have huge impact on CA economy and the instability and uncertainty that those discussions create out there have a major impact on our economy."
Others, like the economists at Beacon Economics, helpfully broke down the cliff situation in a forecast earlier this month and reminded us that the cliff, while damaging economically, won't hit us all at once:
"The shock to the country will be substantial and recession causing – but only if this budget remains in place for a sustained period of time in 2013. In other words, it is more of a fiscal hill, where the effects start to roll slowly but pick up speed over time."
But, don't worry everyone, Washington is totally on it. Oh maybe not...and speculations are that we'll have another kick-the-can-down-the-road deal, leaving the uncertainty in place for longer.
Yet the damage is done and consumers spent less from October 28 to December 24 compared to last year, with only a 0.7 percent increase in sales of home items and electronics. Analysts blamed the cliff, bad weather and Hurricane Sandy.
For those same reasons, small businesses say they are also rolling back hiring plans, according to a Wells Fargo/Gallup Small Business Index poll earlier this month. The survey showed 21 percent of small biz owners planned to cut employees, compared to just 10 percent six months ago.
All that said, it's clear, while California is slowly recovering, there's much that can be done to smooth out these economic valleys. Rajan added that the areas that the state can control in order to battle the uncertainty in Washington are things like continuing to work on improving our workforce pipeline and streamlining confusing or duplicated regulations. These are exactly the kind of work the Economic Summit is engaging in, which you can follow in our Progress Tracker. Keep an eye out for some updates soon.
Here's to unwrapping a promising batch of economic stories next year!