The economic future for California looks bright, according to the latest forecast from Chapman University.
Well, unless a trade war breaks out.
Chapman sees continued strong job growth through the rest of the year with construction and trade-related industries leading the way.
Housing construction should grow this year to the fastest pace since the Great Recession. Its an “adequate” level of building, says Chapman economist Jim Doti, that should meet expected growth in jobs and population.
But that housing production wont make much of a dent in pricing, Doti says. “Affordability is rearing its head in many issues.”
More worrisome is Californias status as the nations top state for international trade, with China and Mexico the top foreign business partners. Doti warns that if current frictions between the U.S. and its trading allies intensifies, “a trade war will hit California hard.”
Heres a summary of Chapmans forecast for 2018 vs. last years results for key economic variables …
New jobs: California, 384,000 vs. 2017s 315,000. Nationwide, 2.20 million vs. 2017s 2.3 million.
Job-growth rate: California, 2.3 percent vs. 2017s 1.9 percent. Nationwide, 1.5 percent vs. 2017s 1.6 percent.
Home-price gains: California, 7 percent vs. 2017s 7 percent. Nationwide, 5.4 percent vs. 2017s 6 percent.
Housing units permitted: California, 131,430 vs. 2017s 113,384. Nationwide, 1,321,000 vs. 2017s 1,208,300.
Looking further ahead, Doti offers some caution — even if the economy isnt jolted by a surprise of geopolitical tensions. After eight years of economic upswing, odds are against much of a continuation.
Rising interest rates will dampen spending for consumers and corporations. New federal income tax rules will also dent Californias household budgets.
Plus, the traditional boost for Californias business climate and its tech hubs such as Silicon Valley has already cooled. And construction cannot grow much faster.
“There are more and more clouds on the horizon,” he says.
ICYMI …
In California, its not blue vs. red! Its homeowner vs. renter! (Even when it comes to Trump!)
California ranked as nations 5th fastest-growing economy
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