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California’s economy is growing, but this could be an anchor

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Posted: Thursday, May 8, 2014 4:50 pm

What is the largest anchor to economic growth in California?

Taxes?

The growing public pension burden?

No. The answer is the high cost of housing.

That’s according to Jordan Levine, who spoke last week at the California Newspaper Publishers Association convention in San Jose. Levine is an economist and director of economic research at Beacon Economics.

I enjoyed Levine’s presentation because he spoke in plain English and tried hard to make his points relevant. For nearly an hour, he delivered a high-energy, thoroughly accessible report on the California economy.

Among his points:

California is not losing ultra-high earners, as some media reports have concluded. It is losing working-class people who simply can’t afford to rent or buy in the Golden State and are moving to more affordable states. That’s a troubling trend moving forward if businesses can’t retain or attract enough workers to survive or grow. Levine said lawmakers should take a hard look at CEQA, the California Environmental Quality Act, which can complicate residential construction.

Levine’s main take was positive, though. Overall job growth in California is up One bright note for Lodi: Hotel occupancy is up, as is tourism generally. And that’s not just the coastal areas, but the Central Valley, too, he said.

Another positive: Auto sales are increasing. That’s a sign that people have solid confidence in the economy.

“In a poor economy, people may still go out for a dinner or a movie, but they won’t make a $30,000 or $40,000 investment. That’s happening now,” Levine said.

Levine’s firm has an excellent blog titled, “No-Nonsense Economics,” which can be accessed at: beaconecon.com

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