California, after an '82 storm or two, sees clear sailing
California may have to ride out a few economic thunderstorms next year, but in the long run the forecast calls for mostly clear skies through the end of the '80s.
Economists at the Bank of American see continued "moderate" economic growth for the state in 1982. They estimate that gross state product will reach $407 billion, a 12.5 percent increase from 1981.
After inflation, that's a 3.5 percent gain, slightly higher than what's expected in real growth for this year, 3 percent. As it's been since 1973, California's economic growth will outpace that of the nation as a whole next year, the bank predicts.
A more cautious view is taken by Ted Gibson, vice-president and senior regional economist with Crocker Bank. California's economic recovery, now scarcely a year old, has "stalled on takeoff," he says.
"After registering solid gains in the closing months of 1980 and the early part of this year, most indicators of business activity suggest the state's economy has settled into a lull," he comments.
Meanwhile, economist at UCLA's Graduate School of Management see gloom for California in their quarterly forecasts. Economic conditions in the state will reflect somewhat more adverse circumstances than for the nations as a while, dampening California's immediate economic growth, they say.
"The slowing employment growth is especially evident in aerospace, which has come to a halt after very strong growth in 1978-79-80," the UCLA forecasters have written. Their "rather grim outlook" was focused on the period between the second quarters of 1980 and '81, when makers of electronic components lost 5,900 jobs, and the spread between this year's first and second quarters, when aircraft employment was off by 4,300 jobs.
"The high-technology electronics and computing industries are typically rapidly growing in normal times and only pause during recessions," the UCLA people reported. "Their present behavior is quite abnormal for a 'recovery' phase of the economy."
The report says state unemployment will stay in the 7 percent range in 1981- 82, with no real improvement expected until '83. Housing starts measured in authorized building permits are sliding to a 14-year low and are predicted to drop below an annual rate of 100,000 units in this year's third quarter. The UCLA forecast calls for a recovery to 153,000 units in 1982, up from 118,400 expected this year but "a level still rather depressed."
Looking over the longer term, the Center for Continuing Study of the Calfornia Economy in Palo Alto finds the state's economy has an underlying strength and resiliency that should carry it through the 1980s in "remark-ably good shape."
Economists at the center say nearly 2.5 million new jobs will be added in the state by the end of the decade, with each major economic region in California growing faster than the nation in the 1980s. Moreover, events of the past two years suggest even higher levels of jobs, population, and households in each economic region than was predicted earlier.
High technology will continue as a leading growth factor, adding nearly 140, 000 new jobs by 1990. "In addition, California will have a competitive advantage in the development of new industries based on innovations such as genetic engineering and solar technology," says Stephen Levy, senior economist at the center.
California's population will grow by 4.2 million in the 1980s, reaching just under 28 million by 1990; more than 2.7 million households will be formed; total personal income in real (not inflated) terms will increase by $100 billion to $ 140 billion by 1990; and by that year nearly a fifth of all California families could have real annual incomes above $50,000, the center forecasts. Nearly half of all California families could be earning more than $30,000.
Measured by Bank of America's 1982 outlook, California will generate about 330,000 new jobs next year, 15 to 20 percent of all new jobs created in the United States. Next year's unemployment rate should be 6.8 percent, expected to be lower than the national rate.
State gross farm income in 1982 should rise 7.7 percent to about $16.7 billion, with net farm income totaling about $3.9 billion, a gain of 8 percent over 1981. "By next spring it should be known conclusively if the Medfly problem hs been controlled," the bank says.
The state's international trade is forecast to expand next year at a rate faster than that either in the United States as a whole or in the world. Total imports and exports passing through California ports should reach $80 billion, an increase of 18 percent over 1981.
After a two-year absence, many of the forces tha helped propel California's "remarkable" economic boom of the late 1970s should return next year, says the Crocker's Mr. Gibson. But whether economic growth will be sustained at above-average rates beyond that forecast horizon will largely depend on conditions in the housing market. This includes not only an easing of mortgage credit conditions, but ultimately a less restrictive set of local zoning and permit policies.
"Longer term, the state must also remove its self-imposed restraints to the expansion of energy supplies and the highway system," Gibson says. "With national policy now firmly established on a course designed to end the economic malaise, the time has long since passed for California to end its fascination with limits and focus instead on the potential our future holds."