California’s economy to grow schizophrenically – at best

LOS ANGELES
December 11, 2012 9:01pm
Comment Print Email

•  Expected to lag national growth

•  “California's tech sector and venture capital infrastructure … will simply disappear”


The Central Valley will remained mired in economic depression for the foreseeable future, while parts of California prosper beyond the national average, according to a report Wednesday from the California Lutheran University Center for Economic Research and Forecasting.

“Inland California (the Great Central Valley, the deserts, and rural Northern California) is suffering what amounts to a depression. Unemployment rates are extraordinary. Poverty is persistent. Economic growth is rare and localized. Expect little economic growth here,” says the report, written by Bill Watkins, director of the Center.

California's schizophrenic economy is difficult to forecast, he says, breaking the state into four distinct centers, each of which is on a different path.

The Bay Area, and to a lesser extent San Diego, is booming, Mr. Watkins writes. “California's tech sector is incredibly vigorous, and it's driving growth rates that exceed the United States growth rate. California's tech sector will likely prosper throughout the two-year forecast horizon. Those communities that house it will enjoy an excellent economy,” he says.

The Greater Los Angeles area is an economy still in transition from an Industrial economy to a post-industrial economy, he says. The region has already seen the demise of its tire, steel, and auto manufacturing, along with most of its ship building and aircraft manufacturing.

“The transition has been difficult, but Los Angeles has avoided the devastation we see throughout the rust belt. Its diversification, climate, ports, and location on the prosperous Pacific Rim have been huge advantages,” writes Mr. Watson.

Los Angeles' transition will continue. “We think this mostly means that its economy will plod along, slowly growing most quarters, but the occasional quarterly decline would not be surprising,” he says.

Then there is California's “Geriatric Coast,” as Mr. Watkins puts it. “It's continuous from Los Angeles to the Silicon Valley. It skips the Bay and begins again at the north end of the Golden Gate Bridge, extending through Mendocino County.”

This area is wealthy, but not prosperous, he says. It is where wealthy, and usually older, people come to enjoy life. It is a consumption economy with little investment or growth. The jobs, outside of its still-impressive agricultural sector, are mostly related to tourism, retail, restaurants, government, and businesses that support a wealthy and aging leisure class, Mr. Watkins says.

“There is one growth industry here, medical care. It will continue to be an increasingly important component of the Geriatric Coasts economy,” he says.

Nationally, the report notes that Americans’ wealth is down about 20 percent from its pre-recession high. The labor force participation rate is lower than it has been in 20 years.

“Given those data, you have to wonder why Americans are increasing their debt load,” Mr. Watkins writes.

Large student debt loads combined with weak job prospects will result in slower household formation, delayed home purchases, delayed childbirth, and fewer children, he predicts. “All will slow economic growth and increase the probability that this generation will be the one that pays for it all,” he says.

“Unless something really big and unforecastable happens, large portions of California's economy won't grow much at all,” Mr. Watkins predicts.

“In the long run, without significant policy changes California's tech sector and venture capital infrastructure will go the way of the state's industrial base. It will simply disappear,” he opines. “Californians will eventually notice that the center of innovation has moved east or overseas.”


Comment Print Email












  • How to compete against Wal-Mart
  • Stockton mom turns a need into a business
  • The entrepreneur is in
  • Writing her own success story
  • Growing a small business the family way
  • The future pencils positive for this company
  • Niche marketing -- Italian style
  • Sipping success with niche marketing
  • Roasting a business out of his passion
  • Success as an independent consultant takes more than expertise
  • Avoiding the traps of employee law violations
  • Cracking the voice-over market
  • The American Dream realized, one package at a time
  • Female winemaker plunges into business
  • A new take on nurse education
  • Family sees moving business success
  • STEM thrives in pockets of education innovation
  • STEM goes solar in Stockton
  • Quick! There’s a robot in my pool
  • Retiring seniors can mean new business
  • Predawn biotech class trains next generation of science workers
  • Staying ahead of the competition the old fashioned way
  • Central Valley sees mismatch between high-tech jobs and job seekers
  • STEM starts young
  • Get ready – the future is here now
  • STEM Education: Growing the Valley's Future
  • They’re low power in wattage only, not ideas
  • Thinking success spawns Successful Thinkers
  • Small business success can mean finding the right niche
  • This franchise has real muscle behind it
  • Getting the scoop on small business success
  • Reshoring could rebuild America's manufacturing
  • Marketing that’s deliberately anchored to the past
  • Guitar artist plays his way to success
  • Paralysis no handicap for this entrepreneur
  • Boost sales with better communication
  • Making sandwiches sexy with a franchise
  • Going solar without spending a lot of money
  • They’re cute and cuddly. But are they a business?
  • Opportunity sails forth in the Delta
  • How bad etiquette on the job could kill your career
  • Growing their way out of hunger and poverty
  • Finding small business success from floor to ceiling
  • Why he’s public enemy #1 – for gophers
  • Running a home-based business successfully
  • Your boss needs a vacation – really
  • Couple makes transition from big corporations to small business
  • Carving a small business niche with a better idea
  • Calm is the goal of computer service and education franchisor
  • Developer squeezing new life into downtown with juice franchise
  • Signs of a recovering economy
  • How to keep a family business in the family
  • Ford dealership expands despite the Great Recession
  • Utility Telephone connects with customer service
  • Crowdfunding basics
  • The roar from crowdfunding is getting louder
  • California water wars’ bulldog
  • Water wars heat up in California
  • Helping businesses grow with a stronger STEM
  • How to retain your best employees
  • Small business runs success up the pole
  • Winery expands in Lodi
  • Lodi wineries tapping into growing Chinese market
  • Has the jobs picture brightened for the Valley for 2012?
  • The right education will be needed for 21st Century jobs
  • Where new jobs for San Joaquin will come from
  • Developing jobs for San Joaquin – Part 2
  • Developing jobs for San Joaquin
  • Fruits of his labor
  • Helping grow food security in the Valley of plenty
  • Doing a business turnaround despite the recession
  • Keeping customers loyal helps build her business
  • Expo exposes businesses to utility contracting ideas
  • Drink mix maker taps expertise to blend success
  • Entrepreneur finds success in a basket
  • Tips for catching resume fraud
  • There’s no checking out for this small business owner
  • Entrepreneurs take Valley sports play-by-play to the world
  • Starting a winery from scratch
  • Job hunting tips for the long-term unemployed
  • In the Central Valley, opera isn’t always the Grand Ole Opry
  • Branding ideas for small businesses
  • The ump’s not blind, but the players are
  • Finding success by tapping your brain in a new way - Part Two
  • Finding success by tapping your brain in a new way
  • Machines talking to machines is the future
  • Getting involved in the fight against AIDS
  • Franchised divorce says it’s a better way
  • Small business owner is brewing a success story
  • To beat the Great Recession, they’ve expanded
  • Taking a swing at strokes
  • Alert your taste buds – here comes Taste of San Joaquin
  • This franchise has real muscle behind it
  • Passion for his city drives him
  • Vicente Fox speaks out on U.S.-Mexico relations
  • Give your support staff recognition and reap top performance
  • Central Valley baker gets top honors for Royal Wedding pie
  • Asparagus Festival ends on high note
  • Stockton close to annual ‘tipping’ point
  • Framing small business success
  • Small business sees Affordable Care Act helping its bottom line
  • What you eat – and when – helps local restaurants
  • Coping with the aftermath of foreclosure
  • How to raise charming children
  • Central Valley grad school goes all-iPads
  • Solution to Delta water wars voiced
  • Making sure your personal bottom line is covered
  • Small California winemaker is all family
  • Small winery relies on family and innovation to compete
  • Central Valley company says it has a better way to store solar power
  • What’s wrong -- and right -- about local TV news
  • What planning means to small business success
  • Making the leap to small business
  • Out of work at middle age? Experts offer advice
  • Small business marketing, one article at a time
  • Congress on your corner as it’s supposed to be
  • Central Valley city’s heritage rediscovered
  • Central Valley school is building students’ foundations
  • Job tips from the expert
  • Long-term jobless worker re-invents himself
  • Building a new power plant means jobs for Central Valley
  • Sacramento reaches for the stars with new science center
  • Lodi Chamber opens China’s doors to small business
  • Writing books for fun – and sometimes profit
  • Black Friday shopping? How to protect yourself from scams
  • California winemakers can find added rewards overseas
  • Wine makers tap overseas markets from Lodi
  • A new revenue stream for Central Valley small businesses
  • Food bank seeks more business support
  • Tips for finding a job in the Great Recession
  • State may solve some of its prison woes with new Stockton facility
  • A solution to underwater mortgages
  • Should public libraries be managed by private firms?
  • Central Valley moves ahead with critical water project
  • Dee Dee Myers and the increasing impact of women on small business
  • How women are growing their small businesses
  • A market with a mission
  • Retailer 'paints' solutions to cash flow challenge
  • An answer for the unemployed – return to school
  • A ‘golden’ small business success story
  • Central Valley winegrapes blessed
  • Rubbing out the recession with a franchise
  • Surviving the recession as a small business
  • It’s personal, union says of Stockton fire cuts
  • How old it too old to start a new business?
  • They've found the recipe for small business success
  • MBA students help revive Central Valley farmers market
  • Classic wooden yachts anchor in Stockton for weekend
  • Foreclosures, short sales – a bank president comments
  • The strength of family helps this small business compete
  • Festival spears success in Central Valley
  • Social media helps keep family business prospering
  • Central Valley students get training in ‘green’ futures
  • Knives readied as Valley cities slash services
  • Central Valley jobless picture still grim
  • Delta residents told to ready for water war
  • Opportunities outlined for Central Valley small businesses
  • Rewiring your brain for success
  • Central Valley no longer ‘shell shocked’ by recession
  • To fix California’s government, look to London
  • Taking your sales pitch to the next level