California Conservative

S.F. Business Times reports: “An economic report out Tuesday predicts continued slow growth for the U.S. economy through 2006 and growth that is slower still for California’s.

That’s why Gov. Schwarzenegger has got his hands full, and needs the voter’s support.

The California economy is a picture “of an economy not at the start of a new expansion, but very near the end of an old one,” wrote UCLA Senior Economist Christopher Thornberg in the UCLA Anderson Forecast of the California and national economy.

On the plus side, taxable sales are up 10 percent so far this year, over last, investments other than in real estate are rising, office vacancy rates are declining, and airports and seaports are busy, Thornberg reported.

But on the minus side, personal income growth has been slow and taxable sales and wages are out of balance. Sales are driven by consumer demand, which is driven by the “wealth effect” of a hot real estate market, he stated. In other words, people are spending more because their homes are more valuable, not because they’re getting larger paychecks.

California’s economy could weaken further if the real estate market cools off, Thornberg warned. “Prices don’t have to go negative to have an impact. Just 15 percent to zero percent [growth] is enough to start the dominoes falling.”

Last week, Arnold appeared on FOXNews for an interview with Bill O’Reilly. In discussing how to deal with the issues facing California, Schwarzenegger summed it as follows:

First, “Stop the bleeding”
Second, “Heal the patient” - referring to his reforms
Third, “Build for the future“

Logical. Very straight-forward. Makes perfect sense.

Putting the California economy back on track is going to require reforms of existing spending practices. Democrats don’t want to accept that fact.

RELATED:
Political Branding: Democrats Call Schwarzenegger’s
Reforms “An Election About Nothing”
Schwarzenegger’s Initiatives: Special Election
on November 8, 2005

See the BFL Special Election site

This entry was posted on Tuesday, June 21st, 2005 at 5:18 pm and is filed under Arnold, Capitalism, Economy, Sacramento. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.