California's not the economic superstar it once was
Gerrit van Honthorst: Solon and Croesus, 1624. Image in Public Domain
The CA Legislative Analyst's Office has just admitted that, thanks to persistent substantial unemployment rates, the Golden State is entering a recession. Looking on, the Washington Examiner remarks that CA—with the highest income inequality, homelessness, and poverty rates in the nation—isn't the emulable powerhouse it used to be; that today, being “like California” (once a hallmark of innovation, success, problem-solving) is more insult than aspiration.
In a blow to Democratic Party claims that California is the economic engine of the nation and an even bigger blow to the presidential aspirations of Gov. Gavin Newsom (D-CA), the nonpartisan California Legislative Analyst’s Office reported Thursday that not only was California’s government facing a short-term $68 billion budget deficit, but the state appears to be in a recession.
Under the subhead “California Entered A Downturn Last Year,” the LAO reports that due to Federal Reserve actions, “California businesses have had much less funding available to expand operations or hire new workers.”
“These mounting economic headwinds have pushed the state’s economy into a downturn,” the LAO continues. “The number of unemployed workers in California has risen nearly 200,000 since the summer of 2022. This has resulted in a jump in the state’s unemployment rate from 3.8% to 4.8%, as Figure 1 on the next page shows.”
Figure 1 then graphs California unemployment rates going back to 1978, with dots indicating each time California’s unemployment rate triggered the “Sahm Recession Indicator,” which Figure 1 explains “signals the start of a recession when the three-month moving average of the unemployment rate rises by 0.5 percentage points or more relative to its low during the previous 12 months.” …
Considering how vulnerable California’s tech-heavy economy has proved to be from non-zero interest rates, maybe the rest of America shouldn’t be in a rush to emulate California. The state has some of the nation’s highest income inequality, and it has the nation’s highest poverty and homelessness rates.
This article originally appeared in the Washington Examiner. Read the whole thing here.
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