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Economic data released for the first quarter is consistent with a moderate expansion for the California economy at the start of the year.

May 2019 CA Economic Outlook

May 13, 2019
By Robert A. Dye, Ph.D., Daniel Sanabria

California Cooling

Economic data released for the first quarter is consistent with a moderate expansion for the California economy at the start of the year. California GDP has grown at or above 3 percent since 2013. However, there are signs that some of the major economic drivers are cooling. The state added 51,300 jobs in Q1. This is about half the job gains seen in 2018Q1, and the slowest start to the year since 2016. While we expect job growth to pickup in Q2, the overall trend in the pace of hiring will be slightly weaker in 2019 than in 2018. California has also seen a slowdown in the residential housing sector. Both single-family and multifamily housing starts have been on a downward trend since early 2018. In the near-term lower mortgage rates may be able to help stabilize new home construction this year. However, the longer run trends of low affordability and net outflow of people from the state are more difficult to overcome. Home prices across the state’s major metropolitan areas are increasing at the slowest rates since turning positive in 2012. The year-over-year change in the Case Shiller Home Price Index for Los Angeles was up 1.8 percent, San Francisco was up 1.3 percent and San Diego was up 1.0 percent in February. Ongoing trade tension between the U.S and China is a major risk factor for the California’s trade sector. Combined imports for the Ports of Long Beach and Los Angeles were up just 0.8 percent while exports were down by 8.9 percent from a year ago in April. The Trump Administration implemented additional tariffs on $200 billion worth of Chinese goods on May 10 and the Chinese government has threatened retaliatory tariffs in response.

For a PDF version of this report, click here: May 2019 CA Economic Outlook

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