Comerica Bank’s California Index Increases

December 5, 2017
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index grewby 0.2 percent in September to 121.2. September’s readingis 23 points, or 24 percent, above the index cyclical lowof 97.8. The index averaged 118.6 points in 2016, two andthree-tenths points above the average for all of 2015. August’sindex reading was revised down to 120.9.

Comerica Bank’s California Economic Activity Index increasedin September, reversing August’s losses. After an inconsistent spring and summer hiring season, the stateposted consecutive monthly job gains in September and October. California job gains have firmed overall in thesecond half of 2017, adding a net 160,000 jobs from Julyto October. Ongoing improvements in the state’s labormarket will support the California economy through yearend 2017. The September index results were mostly positive,with five out of eight sub-indexes improving for themonth. The positives were nonfarm employment, unemploymentinsurance claims (inverted), house prices, totalstate trade and the Dow Jones Tech Stock Index. The twonegative factors for the month were industrial electricitydemand and hotel occupancy. Housing starts were unchangedfor the month. We expect the California economyto grow at a moderate pace as it navigates the uncertaintysurrounding tax reform. Congressional republicans hopeto have a final tax bill to President Trump by the end ofthe year. Corporations are expected to benefit from lowertax rates. However, uncertainty remains on the individualside of tax reform and its impact on household spending.In particular, the final standing of the mortgage interestdeduction, the state and local tax deduction and the alternative minimum tax is unknown. These issues may bemore impactful in high income states like California.

For a PDF version of this report click here: CA_Index_1117

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