In spite of high unemployment and a $20 billion budget deficit, California's officials are positive that an economic rebound is not far away. After all, historically, California is the place where stars are born, where research and development in futuristic technology becomes reality, and now, where "green" possibilities are promising to color the Golden State with a brighter economic outlook.
At a recent solar cell plant opening, Governor Schwarzenegger ruminated on the evolution of the state's industries: "Three decades ago, it was the aerospace industry that propelled and powered our economy. Then it was the computer industry that did exactly that and really pushed our economy forward and created great revenues for the state. And now it's clean technology; that's the next wave. And that's why The Wall Street Journal has already said that this is California's new Gold Rush - green technology."
The Economic Forecast
Economists predict slow, but eventually meaningful improvements in several industry sectors. UCLA Anderson Forecast Senior Economist Jerry Nickelsburg has noted that the economic outlook for the balance of 2010 is for little or no growth in the state, with the economy picking up speed slightly by the beginning of next year, and more normal growth rates for California expected by the middle of 2011. He added that "the keys to California's recovery are a growing demand for manufactured and agricultural goods from outside the state; the recovery of U.S. consumption, which increased the demand for Asian imports and for products from California's factories; increased public works construction; and increased investment in business equipment and software."
Six industry clusters currently impacting the state's economy are biosciences (pharmaceutical firms, medical laboratory research, and biomedical instrument manufacturing), computers and semiconductors, information technology, telecommunications (communication services and equipment manufacturing), aerospace, and agriculture.
In its first quarterly report for 2010, the UCLA Anderson Forecast called for employment in 2010 to climb but not to exceed last year's levels. Once employment growth returns in 2011, employment will begin to grow faster than the labor force at a 2.3 percent rate and the unemployment rate will begin to fall. Real personal income growth is forecast to be 1.3 percent in 2010 and 3.7 percent in 2011, and 4.5 percent in 2012. The unemployment rate - currently at 12.5 percent - will fall slowly through the balance of this year and should average 11.8 percent for 2010. Though the state's economy will be growing, it won't be generating enough jobs to push the unemployment rate below double-digits until 2012.
GoED: A One-Stop Shop
California Take Away's
• Is one of the 10 largest economies in the world with a gross state
product of over $1.8 trillion
• Was ranked as the eighth-largest economy in the world In 2008
by the International Monetary Fund
• Represents 13 percent of U.S. GDP
• Is home to 51 Fortune 500 companies, more than all but two states
• More than 15,000 miles of highways and freeways
• 12 cargo airports and 11 cargo seaports
• 18 foreign-trade zones and 42 enterprise zones
• Location on the Pacific Rim that gives businesses access to the
global economy and one of the largest trade networks of any
• 51 percent of green businesses plan to grow in 2010, compared
to 39 percent of traditional businesses
• 77 percent of green businesses and 65 percent of traditional
ones plan to expand their green business practices
This April heralded the debut of California's new Office of Economic Development (Go-ED), dedicated to cutting through the red tape and streamlining bureaucracy. At its opening, Governor Schwarzenegger recognized the financial clout behind the Golden State - citing it as "one of the largest economies in the world with a gross state product of over $1.8 trillion."
While costs may not always be the lowest compared to other states, the Governor noted that California's other attributes compensate for the financial drawbacks. At the GoED opening, he explained, "I think that the good news also is that California is the best place to do business. It's not always the cheapest place to do business, but do you make your decisions just based on what is the cheapest place, or what is the best place?.And we all know that property is more expensive in California, we all know that energy is more expensive than in other states. But you can do more business, you can do more growth, there are more revenues coming in and so on."
The new GoED office coordinates "more than 100 programs across 28 state departments .creating basically one office, a one-stop shop, a concierge service, so to speak, in order to make it easy," Joel Ayala, GoED's new director said. "By creating the California Governor's Office of Economic Development, Governor Arnold Schwarzenegger has made it very clear that he wants California to make it easier to do business and help with the state's economic recovery. GoED represents a critical step in engineering an economic turnaround for California and reestablishing the state's position as an economic powerhouse. GoED will work tirelessly to make it easier to do business in California; we will leverage all resources to benefit those interested in running, expanding, or keeping businesses here. California is, after all, a place where economic resilience and entrepreneurial spirit thrive, and where innovation, inspiration, and opportunity can be accessed."