All Posts Tagged: Southern California

California Economic Outlook: Trade War Fallout

Scott Anderson
Chief Economist

California’s job growth unexpectedly accelerated recently, bucking a national slowdown trend. Consequently, we have revised our job growth forecast for the state to 1.4% for 2019 from our prior forecast in June of 1.2%. However, the longer-term outlook is still for slower job growth.

Less Traffic

The U.S. and China have added more tariffs in the past few months. This has increased the likelihood of a protracted trade war that will dent economic growth in both countries and in the State of California. The negative fallout from the U.S.-China trade war is beginning to show up in economic data. Total two-way maritime traffic is down 0.3% at the Los Angeles and Long Beach ports. These ports handle about half of all maritime trade with China. This does not reflect the additional tariffs of approximately $110 billion on Chinese imports that were put in place on September 1. They are likely to curb trade flows even further and could result in job losses at the state’s ports and transportation and warehousing hubs.

The expansion of the trade war to the technology sector is a significant headwind for technology companies in the Bay Area. The sector is already facing challenges from increased regulatory and anti-trust scrutiny. This clouds the economic outlook for the state and region because tech has been driving a significant share of California’s growth.

An analysis by the Bank of the West Economics Team finds California’s Central Valley farm sector has so far weathered the U.S.-China trade war. However, prolonged tariffs will likely hit both farm income and employment and become a bigger drag on Central Valley economic growth.

Slower Job Growth Ahead

Despite the recent uptick, annual job growth in California has slowed for the past three years. The slowdown is forecast to continue through 2020, with growth of 1.4% this year and only 0.7% next year. The forecast growth for 2020 would be the slowest since employment contracted 1.1% in 2010.

Job growth is expected to accelerate in the Bay Area and Central Coast in 2019 but slow sharply in Southern California and the Central Valley. The forecast for 2020 is noticeably slower growth across all four regions. California’s unemployment rate reached a one-year high of 4.3% in April but declined to 4.1% by July, matching the record low for the state. Unemployment in California is forecast to average 4.3% in 2019 and 4.6% in 2020 as job creation slows.

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California Economic Outlook: Blowback

Scott Anderson
Chief Economist
port-of-long-beach-cranes

The trade war between the U.S. and China has negative implications for California.

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California Economic Outlook – April 2019

Scott Anderson
Chief Economist
The lights of Los Angeles glow under a sunset sky

Our California Economic Outlook compares regions across the state. How did your region of the state shape-up in Q1 and what’s the forecast for the future?

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California Economic Outlook – June 2018

Scott Anderson
Chief Economist
Side view of tall concrete bridge spanning two peaks along the coastline of California at sunset.

California’s job creation continues to outperform the nation, but job growth has slowed as more metro areas exceed full employment.

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Customer Wise: A picture of perseverance

Michelle Di Gangi
Small Business Banking
Dave Hanson at one of his Jax Bicycle Center locations, with bicycles in the background.

Dave Hanson is a model of perseverance and small business savvy. Currently one of our business banking clients, he got into the bicycle business in 1976, when he was a high school sophomore.

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