Monday, September 03, 2007

There's a reason it's called the Golden State.

Thanks Erin!

Steven Levy is the senior economist at the Center for Continuing Study of the California Economy in Palo Alto, Calif., which he co-founded more than 35 years ago. Today, the Wall Street Journal Online wrote a nice feature about why he thinks you should care what happens in California... whether or not you are in California. Following are some excerpts, or you can read the whole article here.

"This cycle doesn't look like it is going to end well, he says. His reasoning is deceptively simple: 'There's a limit to what people can afford.' "

"Even multiple cuts in the Federal Reserve's target federal-funds rate, he argues, won't necessarily help until prices become more rational. With 10.7 months of unsold inventory, not counting homes that would be on the market if sellers thought there would be buyers, he believes Californians can expect another few years of difficulty, depending on the speed of this housing correction."

"Why should non-Californians care about the California housing market, especially when the S&P/Case-Shiller Home Price Index shows year-over-year increases in such cities as Charlotte, N.C., Portland, Ore., and Seattle? Because the Golden State accounts for 13% of the country's gross domestic product -- or the total value of all goods and services produced -- nearly double the No. 2 contributor, New York. That means that what happens in California, home to such growth industries as high-tech, biotech, venture capital and film, doesn't necessarily stay in California. The impact of slow economic growth, or even recession, in the state will ripple through the rest of the country."


Anonymous said...

Oh I care about what happens in Cali, I just refuse to play by unfare rules. That said, this reminds me of a quote about France and global commerce:

“France is an important member of the global economy, just not near as important as it thinks it is.”

Kate said...

So, somebody got here by googling "why is it called the Golden State"? I feel bad now, because there is no actual explanation in the post. If you come back, Gentle Reader, the answer is:

BECAUSE THERE WAS GOLD IN CALIFORNIA. There was this whole thing called The Gold Rush, in fact, where lots of people moved to California in search of gold in dem dar hills.

Also, there is the golden sunshine and the golden opportunities. And, like the article says, the significant contribution to GNP.