The California economy posted another year of solid growth in 2017. California real gross domestic product was up 3.0 percent last year supported by solid job growth and sustained gains in the state’s key technology sector. That momentum has slowed a bit and there are signs of increased volatility in the early part of 2018. After a strong January job gain of 48,900 jobs, California job gains were muted in February and turned negative in March. This was the first monthly net job loss in the state since June 2016. Tech sector financials have also been volatile this year as the Dow Jones Technology Stock Index has seen two cycles of 10 percent declines from peak to trough in daily closing prices, followed by periods of above 10 percent rebound in prices. From an economic perspective, this becomes an issue if the uncertainty in financial markets begins to impact business confidence and investment. We expect California job growth to stabilize in the coming months and be a driver of economic activity this year, but we expect volatility in the major financial indices to remain in the near-term.
The state’s housing sector continued to improve through the start of 2018, supported by more single-family construction. Permits for new single-family units were up to a 62,000 unit annual rate, or 16.5 percent from a year ago in March, according to the California Department of Finance. This is a positive development for the state’s tight housing market which is seeing home prices climb again. The Case-Shiller Home Price Index was up 8.2 percent in L.A., 10 percent in San Francisco and 7.6 percent in San Diego from a year ago in February.
For a PDF version of this report click here: CA-Outlook-0518.
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