It could be an interesting year.
Dan Walters: Politicians, economists in a dither
By Dan Walters - dwalters@sacbee.com
Published 12:00 am PST Monday, February 11, 2008
California's once-soaring housing industry is in a nosedive and its economy is flattening, but does that mean we're fated for a recession that would worsen the state's budget crisis?
It's an important question, but one that the practitioners of the "dismal science" of economics are unable to answer with certainty.
This month, economists at the Economic Forecast Project, based at the University of California, Santa Barbara, declared that despite the slowdown, they don't see recession looming in the state.
"So far, at least, California has been remarkably resilient," said EFP's director, Bill Watkins, "even as it has borne a very disproportionate share of the United States housing crises."
Watkins cited the fact that only two of the state's major economic sectors, construction and non- durable manufacturing, had shown "significant weakness." Many sectors appear to be expanding, including traditional manufacturing of durable goods, even as factory jobs disappear.
"This creates something of a dilemma for policymakers and economic analysts," Watkins said. "Historically, the measure of economic growth has been job creation. However, the benefits of an economy are realized in consumption."
While Watkins sees the economic glass as being at least half full, a private economic analysis company, Beacon Economics, sees it emptying fast as the state slips into recession.
