Consumer Confidence Rises to 18-Year High

ShoppingAmericans’ consumer confidence rose in August to the highest level in nearly 18 years as their assessment of current conditions improved further and their expectations about the future rebounded.

The Conference Board reported Tuesday that its consumer confidence index rose to 133.4 in August, up from a reading 127.9 in July. It was the highest reading since confidence stood at 135.8 in October 2000.

Consumers’ confidence in their ability to get a job and the overall economy are seen as important indicators of how freely they will spend, especially on big-ticket items such as cars, in coming months. Consumer spending accounts for 70 percent of economic activity. …

Click here to read the full article from the Associated Press

Bay Area Has Become World’s 19th Largest Economy

sanfrancisco3The Economic Institute reported this month that the Bay Area would be the 19th-largest economy in the world, if it were a country, after growing at the fifth-fastest rate of any nation since 2014.

The Bay Area’s nine counties — including San Francisco, Alameda, Contra Costa, Marin, Napa, Sonoma, San Mateo, Solano and Santa Clara — consistently grew faster than the U.S. over the last 20 years. With a GDP of $748 billion at the end of 2017, the Bay Area’s economy now exceeds that of Switzerland and Saudi Arabia.

The Bay Area’s rate of growth, at 4.3 percent compounded from 2014 through 2017, was also about two and a half times faster than the 1.7 percent growth of the United States. Due to that persistent growth advantage, the Bay Area’s GDP per capita is almost $80,000, versus less than $55,000 in GDP per capita for the nation as a whole.

Bay Area employment grew slower than the U.S. economy from 2008 to 2011, but has recently ramped up. The fastest Bay Area job growth sectors in the Bay Area were healthcare. up 26 percent; professional and scientific professions, up 25 percent; accommodation and food industries, up 17 percent; and information technologies, up 14 percent.

Bay Area median wages in 2017 were the highest in the nation at $52,100, versus $50,300 for Boston and $39,800 for Los Angeles.

The Economic Institute credits the Bay Area’s highly educated population as a key competitive advantage. With a metropolitan area national high of 46 percent of resident adults over the age of 25 with a college bachelor’s degree, the Bay Area’s average educational achievement towers over the 31 percent average for the U.S.

Although the Bay Area is often referred to as Silicon Valley, the economy is broadly diversified, compared to New York, which is heavily concentrated in financial services and consumer goods. In addition to tech companies, the Bay Area is home to leading companies in financial services, consumer goods, and other sectors.

This article was originally published by Breitbart.com/California

Gov. Jerry Brown’s last budget grows to $199 billion

Gov. Jerry Brown is using a surging, $8.8 billion surplus in his 16th and final year leading the state to stash billions of dollars in reserves.

He wants to put almost all of the additional money — $7.6 billion of it — into two reserve funds that combined would hold $17 billion a year from now if trends hold.

He warned at a press conference Friday where he unveiled his final budget for the 2018-19 financial year that a recession could be just around the corner and the state should avoid long-term commitments that it might not be able to afford in a downturn.

“This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now,” Brown said.

His plans calls for $137.6 billion in general fund spending and $199.3 billion in total spending. Those sums reflect the dramatic turnaround in the state’s fortunes since Brown took office in the throes of a recession eight years ago. …

Click here to read the full article from the Modesto Bee

California Passes UK to Become World’s 5th Largest Economy

EconomyCalifornia zipped past the United Kingdom to become the 5th largest economy in the world in 2017.

The U.S. Commerce Department reported that California with a population of 39.54 million has a larger Gross State Product at $2.75 trillion, versus the United Kingdom with a population of 65.64 million and a Gross Domestic Product of $2.62 trillion.

A big advantage California enjoys is having a surface area of 163,696 square miles, compared to the UK with just 93,628 square miles of area. Although almost a third of California is uninhabited, about the same one-third of the UK is uninhabited.

Setting a new all-time highest ranking versus the world is a huge change from 2012 when huge swaths of California real estate was getting foreclosed and thousands of cars were getting repossessed. This knocked the not-so-golden state to a world economic ranking of #10.

But California’s Gross State Product jump by $700 billion and created 2 million jobs in the last six years. A huge piece of that recovery has been due to globalism, with the U.S. Commerce Department reporting that California exported $171.9 billion to 229 foreign economies in 2017.

Outstanding performing export sectors were Silicon Valley which passed $30 billion, Hollywood entertainment hitting about $16 billion, and the state’s agricultural sector recording a near-record $20 billion in exports.

The chief economist at the California Department of Finance Irena Asmundson told the Associated Press that California’s economy since the lows in 2012 hit new highs in 2017 that included $26 billion for financial services and real estate; $20 billion for the information sector; and a decade-high $10 billion in manufacturing.

Asmundson added that during the five-year period, California with 12 percent of the U.S. population created 16 percent of all new domestic jobs and the state’s share of U.S. Gross Domestic Product grew from 12.8 percent to 14.2 percent.

California’s unemployment rate was at a 17-year low of 4.8 percent in 2017 and has steadily declined to 4.3 percent at the end of March to set a 38-year low, according to the state’s Employment Development Department.

But not everything is great for all Californians, with Breitbart News reporting that Silicon Valley has the highest income inequality in the nation and the U.S. News & World Reportnaming California as the worst state for “quality of life,” due to the high cost of living.

If California was a nation, the only countries left to pass would be Germany with a GDP of $3.69 trillion, Japan with a GDP of $4.87 trillion and China with a GDP of $12.02 trillion. Then the Golden State could try to pass United States that has a GDP of $16.64 trillion, without California.

This article was originally published by Breitbart.com/California

‘Trump bump’ rescues California’s unemployment fund

donald-trump-2America’s economic recovery has benefited California more than most states because the real estate crash hit the Golden State a lot harder. In other words, we’ve had to claw our way up from a deeper hole.

The good news is that the strength of the recovery is impressive. Hourly wages have jumped by four dollars since the start of the Great Recession. Unemployment has dropped to 4.3 percent, a record low since 1976 when California started keeping track of the data. The new $190 billion general and special fund budget that Gov. Brown proposed last month is an all-time record and $26 billion more than just two years ago. By any metric California’s economy, the 5th largest in the world, is strong.

While California’s progressive legislators seize any opportunity to trash President Trump, the undeniable truth is that most Californians will benefit from the federal tax-reform bill both from increases in their paychecks as well as largess from their employers handing out raises and bonuses.

There is also good news for the state’s businesses community, which will see lower payroll taxes. Back in 2001, the state Legislature — in a decidedly short-sighted move — increased unemployment insurance benefits to a maximum amount of $450 a week for 26 weeks. Increasing benefits by that amount without increasing payroll taxes was a recipe for disaster. That disaster struck with the onset of the recession in 2008. One year later, the state depleted its unemployment insurance fund reserve and went into insolvency, where the fund remains today. In order to continue paying out unemployment benefits, California borrowed $10.2 billion from the federal government between 2008 and 2012.

Under law, California is prohibited from repaying the loan principal out of general or special funds, but can repay the interest due the federal government. The only way to repay the loan back is either by increasing payroll taxes or decreasing benefits. Because California politicians could not reach agreement on how to solve this problem, the federal government acted for them, automatically increasing payroll taxes to settle the debt.

The consequences of the insolvency of the Unemployment Insurance Fund have been dramatic for California businesses and taxpayers. According to the non-partisan Legislative Analyst’s Office, California will end up paying nearly $1.5 billion in interest payments to the federal government out of the state’s general fund. And California employers are estimated to have paid over $2.5 billion in increased federal payroll taxes in 2017 alone, solely for the purpose of making the fund solvent. Increased wages and job growth from the “Trump bump” have helped to repay this loan quicker then might otherwise have been possible.

The unemployment insurance debacle is yet another example of the federal government riding to the rescue and bailing us out. The good news for California employers is that the federal loan will be paid off sometime this year, meaning more money can be invested in businesses and returned to workers.

However, the respite may be short-lived. As is inevitable in the cyclical nature of economies, what goes up must come back down. The nine-year expansion of California’s economy will not last forever and may already be starting to contract. In order to avoid yet another structural budget problem (see also: the general fund and unfunded pension liabilities) it is imperative the Legislature act now to restore sustainable benefit levels before the next recession. Otherwise, the Trump administration may once again have to bail out California.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the Orange County Register

California Second Worst State for Economic Freedom

A new international report has found that due to the burden of regulatory overreach and the highest taxes in the nation, California ranks 49th out of all 50 U.S. states in economic freedom. Only New York is worse.

When Canada’s Fraser Institute published its 2017 “Economic Freedom of the World” survey in September, the index surprisingly found that the United States suffered the third-worst plunge in economic wocalifornia-flagrld freedom (EWF) between 2000 and 2015, by falling 7 places from number 4 to number 11.

The index measures individual components for 1) the size of government and tax rates; 2) impartiality of the legal system and protection of property rights; 3) sound money and inflation; 4) freedom to trade; and 5) regulatory reach and costs.

Co-author Fred McMahon commented, “The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced, and how much is produced.”

Researchers at the Fraser Institute teamed with the U.S.-based Independent Institute’s Center on Entrepreneurial Innovation to gain insight into how much of America’s dismal loss of competitive standing was caused by California’s two-decade lurch to the left.

What they found is that California is now the second-least economically free state, with a score of 5.8 out of 10. That is about 30 percent lower than New Hampshire — America’s most economically free state, with a score of 8.3. New York continued to capture the booby prize for the least economically free with a score of 5.3.

To give a sense of just how far California has fallen, the nation of Mexico has a score of 6.17, or about 6.4 percent higher than California.

Independent Institute Senior Fellow Dr. Lawrence J. McQuillan stated that California has become so toxic for economic opportunity that 10,000 businesses left the Golden State, reduced operations, or expanded elsewhere over the last 7 years. Census data reveal that 3.5 million residents left California for greener pastures from 2010 to 2015.

Breitbart News recently reported that California continues to lead America in poverty, with 20.4 percent of residents in poverty, according to data released by the Census Bureau. With about 46,686,000, or 14.7 percent, of U.S. residents living in poverty, California, with 7,946,000, accounts for about one in six U.S. residents living in poverty.

According to David J. Theroux, Founder and President of the Independent Institute, “The 2017 report shows the public, news media, and policymakers in Sacramento what changes need to be made to make California competitive in the future.”

This article was originally published by Breitbart.com/California

Consumer privacy initiatives could slow the internet economy

internetSACRAMENTO – As the legislative session ends, California political junkies will soon turn their attention to the slate of initiatives making their way to the November 2018 ballot. One of the more significant proposed statewide measures is the California Consumer Privacy Act of 2018, which would give consumers the “right” to know what information businesses collect and to stop them from using it for commercial purposes.

The initiative promises consumers “control” over the personal information businesses glean from “tracking and collection devices” – and seeks to restore privacy rights at a time of “accelerating encroachment on personal freedom and security.” It would apply to all businesses, ranging from internet service providers to websites to cellphone companies.

The proposal has sparked concern in tech-friendly California, given that it could impose significant costs on everything from small-time websites to major internet players such as Facebook, Google and Amazon. If the measure qualifies for the ballot and is approved by voters, it would apply not only to California-based internet companies, but to any entity that does business in the state. So, it could have national reverberations.

“Forcing companies to allow consumers to opt out of tracking, and not allowing those companies to charge more or deny service to consumers who do opt out, would be burdensome for websites and application developers, and would significantly hurt the advertising industry since it would decrease the amount of targeted advertising they can do,” said Tom Struble, tech policy manager at the R Street Institute in Washington, D.C.

The initiative would provide consumers with four new “rights” that would be inserted into the state Constitution. First, consumers would have the right to learn about the categories of personal information that any business has collected from them. Second, consumers would have the right to know how that specific personal information is being used – i.e., whether it has been sold or shared for marketing or advertising purposes.

Third, consumers would have the right to “direct a business” not to sell or share that information. Finally, the initiative grants consumers the right to “equal service or price,” which means the business would be forbidden from charging different prices or limiting services if a consumer directs a business not to use the information.

Companies would be required to honor a consumer’s information request within 30 days and provide it at no charge. The initiative requires companies to set up a toll-free telephone number and website by which consumers could make a “verifiable” request.

The initiative’s backers argue that consumers “are in a position of relative dependence on businesses” that collect this information and that it is difficult for them “to monitor business operations or prevent companies from using your personal information for the companies’ financial benefit.”

Critics, however, argue that the measure doesn’t make necessary distinctions. Unlike a bill now in the California Legislature, it doesn’t distinguish between, say, internet service providers that operate essentially like paid utilities and businesses that offer access to their websites and are paid based on advertising fees. It also does nothing about a potentially greater threat to privacy – collection of data by state and local governments.

The issue has gotten more attention since April, when President Donald Trump signed a law that repealed some Obama-era Federal Communications Commission rules. The rules would have required internet service providers to get permission before using a customer’s information, such as their browsing history, to create targeted online advertisements.

The California Legislature is now trying to restore some of those Obama-era rules. Assembly Bill 375 was designed to “protect California consumers since Congress and the Trump administration effectively halted a set of federal consumer privacy protection rules on internet service providers that were scheduled to take effect,” according to the state Senate Judiciary Committee analysis.

AB375 applies only to broadband providers. As the thinking goes, “people pay heavily for internet service,” which “is akin to a must-have utility,” explained the San Diego Union-Tribune in an editorial supporting the bill. By contrast, Facebook and Google provide their services for free. Consumers presumably know that the “cost” of maintaining a Facebook page and searching for information on a web browser is that those companies can sell targeted advertisements based on one’s search and buying habits.

The bill was referred to the Senate Rules Committee Tuesday following some technical amendments and is likely make it to the Senate floor by Friday’s end-of-session deadline. The initiative has been cleared for signature-gathering. It would go far beyond the intent of AB375 by imposing new requirements on every type of firm that operates in the state.

Consumer initiatives have met with varied levels of success in California over the years. The most recent, Proposition 45, would have “required changes to health insurance rates, or anything else affecting the charges associated with health insurance, to be approved by the California Insurance Commissioner before taking effect.” It lost 59 percent to 41 percent.

The big question with all initiatives is whether their backers have the millions of dollars necessary to collect signatures and then run a successful general election campaign. Given the far-reaching implications of the proposal, Californians can expect aggressive push-back from the tech community if this one starts looking like a serious deal.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by CalWatchdog.com

It’s official: California grows to 6th-largest world economy

As reported by the San Francisco Chronicle:

California jumped ahead of Brazil and France to become the world’s sixth largest economy in 2015, according to a report released Friday by the Center For Continuing Study of the California Economy.

California’s gross state product rose to $2.5 trillion in 2015, up 4.1 percent from the previous year when adjusted for inflation. This outpaced the national growth rate of 2.4 percent, which bumped the United States’ gross domestic product to $17.8 trillion.

Meanwhile, a recession and government turmoil caused Brazil’s GDP to fall to $1.8 trillion.

Behind the United States, China’s economy came in second with $10.9 trillion; Japan followed with $4.1 trillion; Germany came in fourth with $3.6 trillion, followed by the United Kingdom at $2.9 trillion. …

Click here to read the full story

L.A. Has Fallen Far Behind the Bay Area — Perhaps Permanently

Photo courtesy of channone, flickr

Looking at Los Angeles and San Francisco, two successful California cities in 1970 whose fortunes have since diverged radically, The Rise and Fall of Urban Economies tries to answer an old question: Why do some cities thrive while others stagnate? The authors chose their subjects wisely. Had they paired up any other American cities — say, Chicago and Dallas — too many disparate factors would have come into play. Cities in the same state, however, share a universe of government policies, whether concerning income-tax rates or right-to-work rules, grounding the comparison and lending credence to the conclusions.

Los Angeles and San Francisco have much in common: top-notch climates, natural amenities like oceans and mountains, thriving arts and culture communities, and major international airports. In 1970, both cities boasted powerful industry clusters, similar concentrations of manufacturing firms, and highly educated and technically oriented workforces employed by innovative companies (Amgen in L.A., Genentech in the Bay Area). Prior to the 1990s, Los Angeles actually produced more patents than the Bay Area.

Over the last 45 years, however, while the Bay Area’s economy has soared, with per capita incomes raising rapidly, incomes in L.A. have trailed those in America’s other big cities — in fact, they were on par with those of metro Detroit. The authors dismiss many popular explanations for the trend, from housing costs to immigration to government spending levels. One after another, these theories are investigated and rejected as effects rather than causes. What, then, accounts for the difference?

The authors draw conclusions broadly similar to those made by U.C. Berkley’s AnnaLee Saxenian in her 1996 book, Regional Advantage: Culture and Competition in Silicon Valley and Route 128. The influence of San Francisco’s counterculture, they say, inspired the Bay Area’s tech sector to develop a new approach to management oriented around collaboration, distributed development, labor mobility, and open networks. In Los Angeles, by contrast, the entertainment industry emulated Silicon Valley’s networked organizational structure, but remained disconnected from — and in many ways indifferent to — the larger Southern California economy. As indicated by measures like interlocking board memberships, Los Angeles’s corporate community is less interconnected than San Francisco’s.

The authors offer another reason why Los Angeles failed to keep up with its neighbor to the north. Unlike the Bay Area, which pursued a “high wage specialization strategy,” Los Angeles, in the interest of social justice, deliberately focused on lower- and middle-tier economic sectors. “Los Angeles’s leaders generated a low-road narrative for themselves, while Bay Area leadership coalesced around a high-road vision for their region,” they write. Such decisions have consequences, many of which are demographic. Had Los Angeles followed the same path as San Francisco, Southern California would have attracted far fewer working-class Latinos. The authors don’t directly state this, but it’s a clear implication of their findings. It’s logical to conclude that any region looking to replicate San Francisco’s success should take an exclusively high-end focus — social justice be damned.

Though academic in style, this is a fascinating book, especially for leaders thinking through development challenges in their own regions. It is narrow in focus, however. The authors leave job creation out of their definition of economic development. Instead, they focus on per capita incomes. That’s fine, but many readers will equate development with employment.

The Rise and Fall of Urban Economies paints a picture of a tough economic future for any region with a high-cost environment but a low- to medium-skilled labor force. “Los Angeles can never belong to the club of regions that can attract manufacturing back from cheaper regions of the United States or abroad,” the authors note. Though true, this will be painful for L.A.’s boosters to swallow. Retooling such a gigantic economy won’t be easy.

So this is the Recovery? Californians not feeling it

JobsIs the Great Recession over?

In California, the signals are mixed.

On one hand, a recent study of U.S. Census data by the Washington, D.C.-based Economic Innovation Group found that Los Angeles County led the nation with the largest number of jobs added, a total of 352,840 between 2010 and 2014.

The good news extended statewide. Twenty counties in the U.S. accounted for half of net new businesses established in those years, and five of those counties are in California.

Yet the latest Field Poll found that 74 percent of California voters list the economy and jobs as their top concern.

Is that just habit? Or something else?

A closer look reveals a problem of definitions, starting with: What is a job?

“People are considered employed if they did any work at all for pay or profit during the survey reference week,” explains the website of the U.S. government’s Bureau of Labor Statistics, referring to its monthly survey of 60,000 households, “This includes all part-time and temporary work, as well as regular full-time, year-round employment.”

So when people pick up part-time or temporary work for a few days or even for a few hours, the government counts them as “employed” at “a job.”

Some people are counted as “employed” at “a job” even if they don’t get paid.

Here’s an example from the BLS website: “Garrett is 16 years old, and he has no job from which he receives any pay or profit. However, Garrett does help with the regular chores around his parents’ farm and spends about 20 hours each week doing so.”

Here’s another one: “Lisa spends most of her time taking care of her home and children, but she helps in her husband’s computer software business all day Friday and Saturday.”

According to the Bureau of Labor Statistics, Garrett and Lisa have “jobs.” They’re in a category called ”unpaid family workers,” which includes …

Click here to read the full article.

This piece was originally published by the L.A. Daily News