It's often noted that California has the world's eight largest economy. This depends on how you do that math. At $1.9 trillion, the Golden State is just south of Italy on the IMF list (at number 9). But...Italy is having some rather severe financial difficulties at the moment. So if its GDP slips — and it's already slipped pretty far — and California's increases, will California move up? Then we can lock Brazil in our sights! Then the UK!
Actually, before we get too excitied, we should remember that if California were in Europe, we'd be in serious trouble.
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A foreclosure sign sits in front of a home for sale.
Another month, another Case-Shiller index on housing prices — and more bad news for the housing economy. This is from the Wall Street Journal:
The Case-Shiller data come on the heels of the White House's revamp of a mortgage-refinance program for "underwater" borrowers—those who owe more than their homes are worth. But economists say there are few quick fixes for the housing crisis, and easier refinancing rules will do little to address weak demand for homes.
"It was a very bad spring-to-summer-market season," said Nancy Wallace, a finance professor at the University of California at Berkeley. She said a turnaround in the housing market remains largely dependent on loosening credit and a surge in hiring. "People are almost afraid to apply for mortgages and lots of people have little scratches and dents on their credit right now."
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Jobs are not easy to come by in this economy, but at least a second recession now seems unlikely.
The BLS released the preliminary September employment numbers this morning. Unlike last month, when the economy added an adjusted 57,000 private-sector jobs, this month the economy managed 103,000.
This was a lot better than some forecasters had predicted (the revised August numbers, +57,000 versus the Big Zee-Roh, were also welcome). Before today, I had seen September numbers ranging from zero to 130,000. The ADP report, a much-watched measure that comes out before the government total, anticipated 91,000 — the same number it anticipated last month — so the fact that we came in well above that is a cautiously positive sign.
The BLS report should quash speculation that we are heading for a double-dip recession, or that we're in some kind of quasi-recession right now. Felix Salmon doesn't think so — he's making more of a long-term malaise argument — but if we can avoid some kind of debt cataclysm in the Eurozone, then we may be able to turn the ocean liner at this point.
Gotta love Google Public Data Explorer and it's ability to generate cool charts. I like to keep track of how California is doing economically with respect to our big U.S. rival these days, Texas. So I checked out some data on energy expediture as a share of GDP — how much the U.S., California, and Texas are spending, out of all the money we rake in, on power, propulsion, and so on. You can see a big trend here: our energy expenditure peaked in 1981, declined for a long time, then began to climb back up in the 2000s before falling sharply again after the financial crisis in 2008. But look at where Texas has always been. Well above the national percentage, and waaayyy above the California numbers. I guess you could say that Texas, energy-wise, has always been a lot more expensive to power than either California or the nation as a whole.
The unemployment rate in California is far higher than the national level — 12 percent versus 9.1 percent — and that's depressing for residents of the state. But there's one other state that's doing worse: Nevada, at 12.9 percent. The temptation is to put the two states in the same boat, because there are some similarities. Both California and Nevada have been hit hard by the housing crisis, which has created a kind of vast corridor of jobless construction workers between Los Angeles and Las Vegas. But California has the eighth largest economy in the world (if states could be compared with countries, which they can't), at $1.9 trillion. Nevada, by contrast, is around $130 billion.
So the idea that California and Nevada can be subjected to an apples-to-apples comparison just because they sit atop the high-unemployment tally is sort of ridiculous. Nevada may have Vegas and gold mining, but California has Hollywood and Silicon Valley. Besides have a much larger economy, California has a much more diverse and innovative economy. The housing collapse is something that Nevada may never recover from. In California's case, it could just take a while.