California Economy Showing Improvement

California’s economy has gained some important momentum in recent months. While the California economy struggled over the summer, there was a clear improvement in the labor market during the fall. Household employment growth surged and the California unemployment rate plunged. This strong finish to the year should ensure a moderate increase in nonfarm payrolls in 2011.

Yet the outlook for California in 2012 remains very much in flux. Slower growth in Asia and a stronger dollar will hurt California exports and tech demand. A foreclosure and distressed sales backlog and continued weak demand for housing will keep home prices declining in California. More state budget cuts and higher taxes are likely as state revenues fall below government projections for 2011-12. We continue to forecast net job creation in California in 2012, though it is likely to be fewer jobs created than in 2011, and the pace of job growth in California could slip somewhat below the national average.

Click on the pdf link below to view the slide presentation.