You'll Never Believe This, But We've Found A Bullish Case On California

Gregory White
California Economy

Beacon Economics has a new report out with details on the U.S. economy and its growth possibilities.

We’re most interested in the California study, which points to the state having huge opportunities for growth in the medium term, after the difficulties of the housing bubble and financial crisis come to a close.

Check Out Why Beacon Is Optimistic On California >

It's true, subprime mortgages crushed Southern California

Specific parts of California got hammered by the subprime mortgage meltdown, namely Inland Empire in Southern California and the East Bay area in Northern California.

The stark highs and lows of the housing bubble hit most here, and impacted the broader economy.

Source: Beacon Economics

And the housing markets show the severity of boom to bust

California endured its housing decline early in 2007 and continues to do so.

Source: Beacon Economics

Growth has been crushed by the end of the housing bubble

California has beaten the whole of the United States in real economic growth for the past 10 years, notching a 3.7% growth rate while the rest of the country mustered 2.7%.

Source: Beacon Economics

The forecast for real estate will not return the state to the bubble years

Demand for housing still exists due to a rising population. The result will be higher housing prices, though not at the rates seen before the bubble collapse.

Source: Beacon Economics

But the construction market should show improvement this year

Construction is going to benefit from population growth in California, and single-family homes and non-residential are going to be at the centre of that growth.

Source: Beacon Economics

And while consumer markets are dipping

Taxable sales have been in decline since the crisis began though they look to be growing now.

Source: Beacon Economics

And many consumers are shedding debt

Household debt skyrocketed during the bubble, but now many are paying back that debt as the savings rate increases.

Source: Beacon Economics

Personal income still looks set to grow

While personal income levels dipped during the housing collapse, the trend is upward.

Source: Beacon Economics

Personal income is on a strong trajectory

And forecasts look positive, with a return to significant growth imminent.

Source: Beacon Economics

The underlying quality of the Californian worker is impressive

California is extremely well educated compared to the rest of the U.S.. And with the economy drifting towards more high-skilled labour positions, as many low-skill jobs are exported, it looks ready to take advantage of further opportunities.

Source: Beacon Economics

The state's share of U.S. GDP looks set to continue to grow

California's population and its share of U.S. GDP explain just how important it is to the U.S. economy.

Source: Beacon Economics

Population growth looks strong

Population growth in California has bested the U.S. overall since 1971 except in the mid-1990s.

Source: Beacon Economics

All of this means California will be able to make more through taxes

The increasing population and wages mean the California will be able to pull in more tax revenue.

Source: Beacon Economics

Necessary to support the state's funding needs

While cuts are being made, the increase in population and wages will provide some of the taxable income necessary to meet California's funding commitments.

Source: Beacon Economics

Now check out 15 depressing facts about California

Don't Get Excited Just Yet >

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