Is California’s Future Still Golden?

Bill Watkins September 2012

United States

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Why Doesn’t it Feel Like a Recovery?

124.0

126.0

128.0

130.0

132.0

134.0

136.0

138.0

140.0

2000Q1 2002Q2 2004Q3 2006Q4 2009Q1 2011Q2

Non-Farm Jobs-SA

Center for Economic Research and ForecastingUnited States - (millions of jobs)

Fewer People are Working

43

4444 44

44 44

43

42

4241 41

4242

4242

42 4243 43

43 43 43

2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 2010Q4 2011Q3 2012Q2

Real Per Capita Gross Domestic Product

Center for Economic Research and ForecastingUnited States - (thousands of 2005 dollars)

Incomes are Down

212 212 211205

195188

178

162154 156

161 163 166161 166

171 175 173164 169

175 178

2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1

Real Per Capita Net Wealth: Household Sector

Center for Economic Research and ForecastingUnited States - (thousands of 2005 Q1 dollars)

People are Poorer

45.0

46.0

47.0

48.0

49.0

50.0

51.0

52.0

Percent Share of Population

Civilian Labor Force/PopulationJan. 1980 to August 2012

Many have Given Up Looking for Work

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United States Forecast

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Then, there is the deficit.

Hint: It’s not infrastructure or Defense.

10.2

4.5

5.8

5.2

8.0

Total Government Deficit

Dept. of Defense Dept. of Health and Human Services

Social Security Administration

Other spending

Department Overlay as %GDP 2010

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How to Fix the Budget

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How to Grow the Economy

Increase Legal Immigration

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www.clucerf.orgDodd-Frank

Get Rid of Bad Regulation

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Develop Domestic Energy

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The Upside Risk

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What could go wrong?

Real Estate

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

69.0

70.0

1980Q1 1986Q1 1992Q1 1998Q1 2004 Q1 2010 Q1

United StatesHome Ownership Rate, SA

Percent of Households

Home Ownership Getting Better!

Has California lost its mojo?

California Smaller Part of U.S. Economy

11.4%

11.2%

10.9%

10.6%10.7%

10.8%

11.0%11.1% 11.1% 11.1%

11.0%

10.8%10.7%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

California Nonfarm Jobs as a share of United States

Center for Economic Research and ForecastingCalifornia - (percent of U.S.)

-151

-215

-389

-434

-384

-256

-151

-92 -81-63

-46

-120-97

-160

-249

-313

-265

-143

-99

-54 -51

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Domestic Migration

Center for Economic Research and ForecastingCalifornia - (thousands of persons)

20 Years3.8 Million

• 34 % with 12 %

• 38 of 58

• 34.6 %

• 31 %

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“If they can’t do it in California, it can’t

be done anywhere.”

Taylor Caldwell said:

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“I got my mojo worken.

It just don’t work on you.”

Muddy said:

California Forecast

Modest Output Growth

Weaker Job Growth

Persistent High Unemployment.

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Some of California’s regions are doing better than others.

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How to Change California’s Forecast

Recognize the problem.

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Mining

Get rid of bad regulation

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Do regulation right

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Cut the Cost of :

Delay

Uncertainty

Regulations

Taxes

Which brings us back to China

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Thank you!

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