Explaining Southern California's economy

Can we afford the jobs that Amazon wants to bring to California?

Gov. Jerry Brown isn't sure. This is from the L.A. Times' Money & Company blog:

Brown on Thursday did not dismiss the Amazon bid out of hand. But, he stressed that he's mostly concerned about losing an estimated $300 million in badly needed state revenues that his budget expected to get once Amazon complies with a new law that took effect on July 1.

"I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," the governor said after attending an awards ceremony for correctional officers in Sacramento. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

Amazon, so far, has refused to collect the tax on purchases made by California customers. Instead, it's contributed more than $5 million to a referendum campaign to repeal the new sales tax collection law.

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Does the Solyndra bankruptcy mean that green energy isn't the solution to our problems?

That sucking sound you just heard was a half billion in federal loan guarantees and $1 billion in investment capital going down the tubes. Solyndra, a California solar startup, just declared bankruptcy, adding 1,100 workers to the state's already swollen unemployment rolls. 

At Forbes, Todd Woody summarizes the key business issue:

Can U.S. companies developing advanced solar technology compete against low-cost Chinese manufacturers who benefit from state support and a government policy to create markets at home and abroad for their products?

Probably not. In fact, Solyndra's bankruptcy proves that you can have an innovative product (thin solar panels), major venture funding, and government support — and still not make a go of it. Of course, solar isn't everything. Gov. Brown has put forward a renewable-energy plan that's supposedly capable of creating 500,000 jobs, and that plan encompasses a range of non-fossil-fuel sources. 

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Does a new econ guy in the White House mean a new hope for jobless California?

We can always hope so. Princeton economist Alan Kreuger was just nominated by President Obama to head the Council of Economic Advisers, the three-person team that provides know-how on the economy to the chief executive. 

This move has been taken as a sign that Obama intends to get serious about unemployment. As the LA Times' Opinion L.A. blog points out, Kreuger is known for his work on labor issues:

Perhaps the research most relevant to his new post…is the recent work he did with Andreas Mueller of Stockholm University examining the efforts by unemployed people to find new jobs. Among their findings: People spend less time looking for work each day the longer they are unemployed, but they don't lower their wage demands significantly over time. This is especially true for younger workers, for whom the long-term cost of a big cut in pay is more severe than for an older worker closer to retirement, the study found.

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Unemployment: Is it ever gonna get better in Southern California?

Last week, unemployment claims edged above 400,000 again, after falling slightly below that number. Why is this a (potentially) big deal? Because 400,000 is a bit of a magic unemployment number: Fall below it, and you could be on the road to recovery; rise above it, and you could be looking at an economy headed for a stall. Or a double-dip recession. In any case, misery.

What does this mean in Southern California? Nothing good, given that our unemployment rate is running far above the national average of 9.1 percent. In Los Angeles County, it was at 12.4 percent in June, according to the latest batch of statistics released by the BLS.

Angelenos might want to consider themselves lucky, however. As the chart below shows, Riverside and San Bernadino counties have it much worse (the graphic comes from Google’s very useful interactive Public Data Explorer).

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