Explaining Southern California's economy

Economic growth still slow in the USA

NYSE trading floor

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Trades at the New York Stock Exchange. They'll probably take slow U.S. growth in stride and remain focused on troubles in Europe.

The Commerce Department today released data on the second-quarter performance of the U.S. economy, and the best word to describe that performance is "pathetic." The economy expanded by 1.5 percent, after growing by a revised 2 percent in the first quarter (up from the previously reported 1.9 percent).

It could have been worse (Double secret pathetic?). But for the first half of 2012, the economy is staging a repeat performance of 2011, when the economy grew at a rate of 1.8 percent for the entire year. 

Despite the bad news, the economy is still growing. That will keep the threat of recession at bay, even if many Americans, especially those among the ranks of the unemployed, feel like the Great Recession never went away. The U.S. is on the road to have a $16-trillion economy by 2012-13, by far the world's largest.


Facebook's earnings call: The Storify treatment

Facebook Sets IPO Price At 38 Dollars A Share

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Facebook's first earnings report wasn't disappointing. But a big question about its mobile growth prospects is dogging the company.

Facebook reported earnings for the first time today as a public company and, as expected, it mostly met Wall Street's expectations, earning $0.12 per share. But that didn't matter much, as the stock still got crushed in after-hours trading, diving well below its $38/share IPO offering price. How could this be, on a day when the markets rallied on news that the European Central Bank will — wink, wink — not allow the euro to fail, according ECB President Mario Draghi?

I listened to Facebook's earnings call, which feature CEO mark Zuckerberg in additional to COO Sheryl Sandberg and CFO David Ebersman — he of the botched IPO — in speaking roles. The focus of the call was mobile, mobile, mobile. Facebook has almost a billion PC users and half a billion mobile users. And it's to this latter group that Wall Street is now looking for growth. Unfortunately, Facebook just isn't there yet on developing an ad platform for the mobile environment. And it may not get there for a while. 


UCLA Anderson Forecast: It's getting better in California. Sort of

Los Angeles Mission Holds Annual Job Fair On Skid Row

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Job seekers attend an orientation meeting inside the church during Los Angeles Mission's 11th annual Skid Row Career Fair. The UCLA Anderson Forecast doesn't see the employment situation for big parts of the state's labor force improving for another year.

I normally dig pretty deeply into the economic forecasts that are put out by business schools at places like UCLA and Cal State Fullerton, but this time around the UCLA Anderson Forecast for the second quarter of 2012, I'm going to take a more topline approach. I'm going to chop things up into several posts.

Anderson Forecast Director Ed Leamer noted in his national overview that the U.S. is undergoing some big structural changes. We're shifting from an industrial to a post-industrial world. That means any job that can be outsourced, done by a robot, or accomplished by a microprocessor will be. We can't expect the U.S. economy to provide jobs for under-educated workers any longer. Two bubbles — dot.com and housing — masked our weaknesses.

But things are going to be different in the future. We need to adjust. But it's going to take time. And we shouldn't expect a lot of growth now or in the immediate future. The Anderson Forecast team is predicting 2.4 percent national GDP growth by the end of 2013, which is pretty modest. But we were at 1.9 percent in the first quarter of 2012, after doing 3 percent in the fourth quarter of 2012 but only 1.7 percent on average for the year. 


UCLA Anderson Forecast: Don't expect strong growth this year


Photo by Chris Radcliff via Flickr Creative Commons

The UCLA Anderson Forecast released a cautiously optimistic outlook for the U.S. and regional economies.

The UCLA Anderson Forecast just released its second quarterly report for 2012, and the outlook for the U.S. economy is a continued slow recovery from the Great Recession.

At the heart of the report is Anderson Forecast Director and economist Ed Leamer’s assertion that we’ve looking to wrong people to rescue us. Wall Street isn’t really improving, and Washington isn’t going to create the growth that the country needs. What we need to fix is Main Street.

Leamer said that the dot-com bubble and the housing bubble disguised a broken educational system that isn’t preparing workers for good, 21st-century jobs. In California, we’ve seen this from two sides. In Silicon Valley, the high-tech sector is recovering nicely. But inland California continues to suffer under the weight of unemployed construction workers.


Debt: It's not as bad as you think

Mercer 20448

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The National Debt Clock, a billboard-size digital display showing the increasing US debt, is seen on the corner of Sixth Avenue and West 44th Street on August 1, 2011 in New York City.

Paul Krugman does another one of his simple, straightforward Econ 101 columns in which he helpfully ridicules the idea that we're headed down a debt-paved road to ruin. He zeroes in on the tendency of commentators to compare the finances of families to the finances of governments:

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.