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The Economic and Fiscal State of
the West with an Emphasis on
California and the Bay Area
Stephen Levy
Center for Continuing Study of the California
Economy
November 15, 2012
Stanford Symposium of the State of the
West
It’s the Industry Mix,
Stupid!!
Average Annual Real GDP Growth
2005-2011
North Dakota
Wyoming
Utah
Texas
South Dakota
Colorado
Montana
U.S.
California
Arizona
Nevada
Florida
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Real GDP Growth 2010-2011
North Dakota
Oregon
Texas
Waahington
Utah
California
Colorado
U.S.
Arizona
Nevada
South Dakota
Florida
Montana
Wyoming
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Tax Foundation Business Tax Climate
Rankings
•
•
•
•
•
•
•
Wyoming – 1
South Dakota –2
Nevada – 3
Alaska – 4
Florida – 5
Washington – 6
New Hampshire – 7
--Montana -- 8
--Texas -- 9
--Utah -- 10
--Colorado -- 18
--North Dakota --28
--California -- 48
--New York -- 50
Housing was a Critical Part
of Industry Mix During the
Recession
$120
250
$100
200
$80
Billions of 2011$
150
$60
100
$40
50
$20
$0
0
2005
2006
2007
2008
Construction Value
2009
2010
2011
Residential Permits
2012
Thousands of Permits
CA Construction Decline Finally Ending
After Huge Losses
Job Losses Dec 2007—Dec 2009
0
-6%
-0.1
-13%
-0.2
-15%
-14%
-11%
-7%
-9%
-19%
-24%
-0.3
-27%
-33%
-33%
-0.4
Constr.
Constr. Rel.
Manuf.
Other
Manuf.
California
Constr. Finance, Real
Rel.Retail
Estate
United States
All Jobs
What is a better explanation of the
poor recent job growth in Florida
and Nevada—their high favorable
tax ranking or the fact that they
were with California the three
hardest hit states in the housing
crash?
California’s current recovery is led
by the application of creativity to
the production of goods and
services that attract worldwide
demand and by foreign trade and
tourism/entertainment benefiting
from our Pacific Rim location. The
Bay Area is leading the charge.
California Venture Capital Funding
$45
60%
$40
50%
$35
$Billions
$30
40%
$25
30%
$20
$15
20%
$10
10%
$5
$0
0%
1995
1999
2003
2007
VC Funding
Share of U.S.
2011
CA Share of Fast Growing Tech Sectors
25%
20%
15%
10%
5%
0%
Internet
Scientific &
R&D Services.
Software
2007
Computer
Services
2011
Management
& Consulting
Services
Total Jobs
SoCal Share of Motion Picture Sector
150
39%
145
38%
37%
Thousands
140
36%
135
35%
130
34%
125
33%
120
32%
115
31%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Six County Area Jobs
Six County Area % of U.S.
CA Share of U.S. Manuf. Jobs
11.5%
11.0%
10.5%
10.0%
9.5%
9.0%
8.5%
8.0%
1990
1995
2000
Non Defense Manufacturing
2007
2011
Total Manufacturing
2020
An Economic Competitiveness Agenda
for California
Public Foundations to Attract Private Investment
---A World-Class Workforce
---World-Class Infrastructure
---Communities that are great places to live and
work
---Great Customer Service
If Talent is the Key Competitive Advantage
Then competing for entrepreneurs includes competing for
workers and their families
The SVLG CEO Survey reported “a deteriorating state
infrastructure in areas ranging from public education to
public transportation has added to the difficulties of
recruiting the best workforce, finding them housing and
educating their children to be tomorrow’s world-class
workforce”
Promises that are hard to keep.
Retirement benefits and health
care costs at the federal level.
A “perfect storm” at the local
level—slow growing revenues
meet rising retirement costs and a
need to invest to create
communities that are great places
to live and work.