All Posts Tagged: home prices

California Economic Outlook: Blowback

Scott Anderson
Chief Economist

The Golden State’s outlook is actually less than golden. The trade war between the U.S. and China has negative implications for California, which would have the fifth-largest economy in the world if it were a country. Around half of U.S. trade with China currently passes through Los Angeles area ports.

port-of-long-beach-cranes

Tough tariffs

Agricultural exports from the state’s Central Valley could suffer because they are on the list of goods subject to retaliatory tariffs by China.

Indeed, a study from the University of California, Davis, estimates that higher tariffs may cost major U.S. fruit and nut industries $2.6 billion per year in exports to countries imposing higher tariffs, including China. In addition, Bay Area tech companies are also in the crosshairs. For example, higher tariffs mean higher component costs. That could ultimately push prices of devices higher and reduce demand.

Sputtering jobs engine

California’s job growth engine is not dead yet, but it is sputtering. Job growth year-on-year slipped below the national rate in December 2018, after exceeding U.S. growth for nearly seven years. Annual job growth in California has moderated for three consecutive years, and the slowdown is projected to continue through 2020.

For more insights, see highlights of my report below, followed by a link to the California Economic Outlook.

Key observations:
  • California’s unemployment rate rose to 4.3% in April 2019 from an all-time low of 4.1% in July 2018. It is expected to average 4.9% by 2020, the highest since 2016.
  • Job growth is forecast to moderate across all regions in 2019 and 2020 except for the Central Coast where some acceleration is expected in 2019. The slowest job growth is forecast in Southern California over both years.
  • California’s home price increases will moderate to more sustainable rates of around 2.0% over the next two years due to decelerating job growth, slowing economic activity, continued out-migration, and weak population growth.

Read my full report.

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California Economic Outlook – December 2018

Scott Anderson
Chief Economist
Palm-lined tree street in Southern California

Job growth in California has exceeded national job growth for the past 80 months through October, a testament to the continued strength of the state’s labor market.

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U.S. Outlook: How slow can the housing market go?

Scott Anderson
Chief Economist
Housing being built on a small hill, with wooden scaffolding surrounding much of it. Lovely sunrise is shining above the horizon.

Much of the recently released U.S. housing market data has been on the weaker side.

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U.S. Outlook: Strong consumer-led rebound in Q2 GDP anticipated

Scott Anderson
Chief Economist
Young, smiling man wearing an apron and holding a pen while sitting at a table and talking to a business woman.

Robust real GDP growth above 4% is expected in the second quarter of this year, driven by a sharp rebound in real consumer spending.

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Numbers Count: Slower & steady for home prices

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Man and woman walking home and holding keys

Data indicating price increases are more in line with long-term trends is welcome news for potential buyers and most owners.

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