california job growth is california regional economic outlook · 2019. 2. 28. · market conditions...
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CALIFORNIAREGIONALECONOMICOUTLOOK
Bay Area
San Francisco Oakland San Jose
Central Valley
Sacramento San Joaquin Valley
Southern California
Los Angeles Orange County San Diego Inland Empire
February 2015
Scott Anderson Ph.D., Chief Economist Myasnik “Nik” Poghosyan, Economist
Bank of the West Economics
California job growth is
forecast to accelerate in
2015 ‐ another 370,000
net nonfarm jobs will be
added.
California housing
recovery expected to re‐
accelerate over the
forecast horizon with
home price gains
continuing.
Southern California is
projected to become one
of the global tourism
destinations in the world,
attracting a greater
number of domestic and
foreign visitors in the
future.
Bay Area will remain the
fastest growing region
in California with
healthy job growth in
technology intensive
sectors.
Central
Coast
Santa Cruz
Monterey
San Luis Obispo
Santa Barbara
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CALIFORNIA REGIONAL ECONOMIC OUTLOOK
ExecutiveSummary
California’s robust expansion continued in 2014 with improving labor market conditions, rising personal incomes, a strong housing sector recovery, and a well‐balanced state budget.
Nonfarm payrolls in California grew faster than the national average during the last three years, surpassing the state’s pre‐Great Recession peak by 194,100 jobs in December 2014. The state added 320,300 nonfarm payrolls during the last twelve months, growing 2.1 percent. While the number of farm jobs increased only by 3,000 during the same period, showing a subdued 0.7 percent increase over the year due the exceptional drought conditions in the state. The state unemployment rate in December dropped significantly to 7.0 percent from 8.3 percent a year ago, but still remains elevated compared to national unemployment of 5.6 percent for the same period. We expect California’s labor market to continue its momentum, growing at an accelerated 2.4 percent in 2015 and 2.2 percent in 2016, adding nearly 730,000 new jobs in the state by 2017. Over 70 percent of those jobs will be created in professional & business services, education & health, leisure & hospitality, and construction sectors.
Another sign of economic resilience we noticed in the state over the past twelve months is the impressive 27 percent decline of long‐term unemployed (186,000 people). This is the share of willing‐to‐work people who have been unemployed for 26 weeks or more. California’s share of full‐time employed during the
same period increased by 354,000 people, whereas part‐time employment shrank by 56,000 employees, which is a clear indication of the improving labor market conditions in the state.
Thanks to California’s rapidly healing job market and growing wages, the median household income in the
state is expected to grow 7.9 percent by 2016 from an estimated $60,430 in 2014. We expect median home prices to increase another 6.3 percent in 2015, decelerating to a 4.8 percent increase in 2016 due to rising mortgage rates in the second half of 2015 and 2016, lower investor activity, and increases in new home construction and unsold inventory.
The downside risks for California include a possible decline in investment activity in the Bay Area and decrease in agricultural and related products production and exports due to exceptional drought in the ag‐intensive Central Valley. Weak demand from the
rest of the world and a strong dollar could also slow the growth of California’s export‐oriented economy. Conversely, an improving labor market, rising wealth, and increasing retail sales could fuel stronger than expected economic growth in California.
The Bay Area is expected to grow faster than other regions of California over the next couple of years due to its robust technology sector and large share of high‐skilled technical workers.
CALIFORNIA 2012 2013 2014e 2015f 2016f
LABOR MARKET Employment Growth 2.4% 3.0% 2.2% 2.4% 2.2%Unemployment Rate 10.4% 8.9% 7.6% 6.4% 5.9%
INCOME TRENDS Personal Income Growth 7.1% 2.8% 4.6% 6.8% 6.4%Median HH Income ($) 58,330 60,190 60,400 62,600 65,000
HOUSING MARKET Housing Starts Growth 22.8% 33.2% 7.1% 22.8% 18.6%Med. Existing 1‐Unit Home Price 6.8% 23.2% 10.7% 6.3% 4.8%
DEMOGRAPHICS Population Growth 0.9% 0.9% 0.9% 0.9% 0.9%Net Migration 000’s 79.8 74.0 78.3 79.9 86.0
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California’sEconomyisResilient
California’s economy has created over 1.5 million nonfarm jobs since February 2010, which was the “Great‐Recession” low for California employment. The state surpassed the pre‐recession peak by 194,100 jobs in December 2014. The pace of job recovery in California has been outperforming the nation since March 2012, but then decelerated last summer and became consistent with the national growth level in the last quarter of 2014 largely due to a reduction in job creation in the Southern California region.
In December 2014, there were 15,643,900 payroll jobs in California’s nonfarm industries. On a year‐over‐year basis, payrolls improved by 320,300 jobs, or 2.1 percent from December 2013. The Golden State created 11 percent of all nonfarm jobs in the nation in the last twelve months, trailing only Texas. To put this in perspective, the state created more jobs than all the jobs created in 24 smaller U.S. states combined.
The professional and business services sector was the fastest growing industry over the past year, growing 2.2 times faster than overall nonfarm payrolls, adding 110,900 jobs in the state. This was followed by construction that advanced at a solid 4.0 percent, creating 26,000 new construction jobs in the state due to improved homebuilder optimism and growing demand for new housing. At the other end of the spectrum, the government and other services sectors shrank by 0.2 percent and 0.1 percent respectively, together losing 4,500 net jobs.
California’s unemployment rate was 7.0 percent in December, down from 8.3 percent one year ago. The number unemployed decreased by a seasonally adjusted 205,200 persons. We expect the state unemployment rate to improve further, reaching 5.9 percent in 2016, narrowing the unemployment gap with the nation.
HousingSettoRe‐accelerate
The California all‐transactions Federal Housing Finance Agency (FHFA) house price index has improved 31 percent since the market price bottomed in early 2012. As the state economy has recovered, single‐family housing starts have more than doubled as of the fourth quarter 2014, but are still far below their pre‐recession peak.
According to the California Association of Realtors, in December existing home sales ticked up a slight 0.6 percent from a year ago and median home prices in California increased at a modest 3.1 percent at a seasonally adjusted annual rate. The home sales stagnation is typical of major California metro areas in 2014, signaling deteriorating housing affordability and a decrease in investor activity.
However, as California’s economy grows faster than the nation and economic indicators improve, we expect home prices to improve 6.3 percent in 2015 and housing starts to jump 22.8 percent. Stronger job and income growth, and a low interest rate environment should allow primary home buyers and new households to slowly replace exiting institutional investors in the state.
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CopingwithWaterShortages
The exceptional drought and water shortages to some 80,500 California farmers were one of the most‐discussed challenges in the state during 2014. Despite precipitation that took place over the last couple of months, the California Department of Water Resources (DWR) reports 2014 will be one of the driest years on record. The recent DWR report on groundwater basins indicates that drought conditions lead to increased groundwater well activity to compensate for surface water shortages.
According to the report, the groundwater basins are the state’s largest reservoir, ten times larger than on‐ground basins. Year‐to‐September, over 350 new water wells are reported in ag‐intensive Fresno and Tulare counties, and over 200 new wells in other parts of the Central Valley. The report also reveals that in most regions, the level of underground water remains at critically low levels. During the summer peak of 2014, nearly 1.7 million acres sat idled in California, 700,000 acres more than three years ago.
To resolve this issue, the Governor of California signed the Sustainable Groundwater Management Act in September 2014, allowing local agencies to customize their underground water usage plans to their regional economic and environmental needs. In addition, the Governor proposed $618.7 million in funding in his 2014‐2015 outlays to fund a variety of water efficiency projects, and integrate water management throughout the state.
Nonetheless, California remains the top state by total farm output, capturing 11.3 percent of the U.S. total in 2012 (the latest), according to California Department of Food and Agriculture. Top‐five agricultural commodities in the state remain milk, grapes, almonds, nursery plants, and cattle/calves, accounting for half of total farm receipts.
State farm employment in December added 2,200 jobs from the previous month and 3,000 jobs from a year ago. This is an annual increase of 0.7 percent, much slower than 2.1 percent increase in nonfarm payrolls. Despite this modest gain, we remain cautiously optimistic that with effective statewide water conservation policies, California will continue being an agricultural leader for the United States.
CaliforniaExportsFuelGrowth
As California’s economy continues firing on all cylinders, total exports from the state reached a record‐setting value of $174.1 billion in 2014, up 3.6 percent from 2013, and an impressive 45 percent climb since 2009. According to International Trade Administration (ITA) calculations and our 2014 estimates, exports through ports of California supported over 830,000 jobs in the state (5.4 percent of California nonfarm jobs) of which 692,000 jobs are in manufacturing. Top California exports by value in 2014 include computer and electronics, transportation equipment, machinery, medical and surgical instruments, and chemicals.
Exports directly and indirectly support many small and mid‐size businesses in California. According to ITA estimates, they sustain over 75,000 companies exporting from California, of which 96 percent are small and mid‐size enterprises (SME). SME’s share of state exports is 45 percent of the total.
California continues to grow its export markets. The state’s biggest export destinations include Mexico, Canada, China, Japan, and Korea, capturing about half of all California exports. In the past decade, California exports to the countries with whom the U.S. has free trade agreements increased by 52 percent and now comprise 40 percent of the state’s total exports.
California metros with the largest share of exports by value, according to ITA, include Los Angeles (41.3%), San Francisco (13.7%), San Jose (12.7%), San Diego (9.7%), and Inland Empire (5.2%). Due to the strengthening dollar and weak demand from
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Europe and Asia, California export growth may slow this year; however, it may boost the growth of cheaper imports based on the exchange rate differential and a stronger U.S. consumer. This will help insulate the state’s vast transportation infrastructure to this trade shock.
Despite the record‐breaking trade numbers in 2014, the most recent labor dispute between the U.S. West Coast port operators represented by the Pacific Maritime Association (PMA) and longshore workers represented by International Longshore and Warehouse Union (ILWU) may dramatically slowdown two‐way container traffic at the West Coast seaports with negative spill‐over effects on the regional and state economies over the near‐term, potentially reaching a few billion dollars in a two‐week period.
The port strike, if prolonged, threatens thousands of jobs supported by regional exports and imports, and jobs held in transportation, warehousing, retail trade, manufacturing and other related fields. It also threatens to disturb daily business operations of agricultural and food‐processing firms exporting their final products through Southern California seaports.
The vessel congestion in the harbors of the nation’s busiest ports might force the major importers to move away from the region, if the parties involved in the dispute do not reach an immediate agreement.
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TheBayArea
The economic recovery in the nine‐county Bay Area has been marching at a pace that has bolstered the recovery throughout the state. This rate of recovery clearly highlights the growth difference in tech‐driven northern and
manufacturing‐heavy and trade‐oriented southern California after the Great Recession. The Bay Area particularly stands out when we take a closer look at a level of venture capital investment activity in the region, faster pace of job creation in the technology sector, business services and leisure and hospitality industries. Total nonfarm employment reached 3.61 million in December 2014, an increase of 113,500 jobs (+3.2%) from a year ago. Nearly one‐third of nonfarm payrolls in California were created in the Bay Area during the last twelve months. The lowest unemployment rates among California counties in December were mostly recorded in in the Bay Area, including Marin (3.4%), San Mateo (3.5%), San Francisco (3.8%), and Santa Clara (4.5%) counties. On a seasonally adjusted basis, unemployment in the region improved considerably, dropping to 5.1 percent in December from 6.2 a year
ago.
All industries in the Bay Area posted annual job gains in December. The largest annual payroll increase of 39,200 jobs (+6.0%) was recorded in professional and business services, with nearly two‐thirds of the payrolls being added in the professional, scientific, and technical services subsector. This was followed by 16,500 jobs (+4.3%) created in the leisure and hospitality sector. Education and health services added 14,600 jobs during the same period with a great concentration in health care and social assistance. The information sector in the Bay Area continues growing the fastest, logging 8.8 percent growth from a year ago, adding another 12,200 jobs through December. Manufacturing added 6,900 jobs in the region that was offset by manufacturing jobs losses in other regions of California. The financial services
BAY AREA 2012 2013 2014e 2015f 2016f
LABOR MARKET Employment Growth 3.7% 4.1% 3.0% 3.0% 2.6%Unemployment Rate 8.3% 6.8% 5.5% 4.8% 4.6%
INCOME TRENDS Personal Income Growth 9.8% 3.6% 5.4% 7.1% 6.8%Median HH Income $ 71,310 74,230 75,000 77,890 81,070
HOUSING MARKET Housing Starts Growth 37.5% 31.7% -1.6% 8.7% 8.4%Med. 1‐Unit Home Price 8.8% 24.6% 11.2% 7.0% 4.9%
DEMOGRAPHICS Population Growth 1.3% 1.3% 0.7% 0.7% 0.8%Net Migration 000’s 51.9 59.2 11.0 10.8 16.6
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sector added only 200 jobs in the region on a year‐over‐year basis, a muted increase of 0.1 percent.
TechnologyLeadingtheWay
Employment growth in the technology sector bolsters the job recovery in the Bay Area. San Jose, added over 39,000 nonfarm jobs over the past year, growing 4.0 percent from December 2013. The information sector here grew at an astonishing 13.6 percent, adding 8,300 jobs during the past 12 months. The employment landscape for San Francisco looks quite similar. The metro added 40,800 jobs over the year, growing a robust 3.8 percent during the same period. The Information sector added 3,400 jobs, growing a sizzling 6.5 percent.
Defined as a sum of information and professional, scientific, and technical services jobs, tech‐driven employment in the Bay Area metros outpaced its peers in Southern California. We calculated a recovery coefficient – the share of employment in the tech industry compared with the industry’s pre‐recession peak employment. This analysis compares tech jobs in December 2007 with those in December 2014, the latest available. December 2007 was the highest employment level in California and serves as a proxy for pre‐recession peak in six selected California metros. A recovery coefficient greater than “1” indicates that December 2014 tech employment is above the December 2007 peak. More precisely, San Francisco and San Jose coefficients of 1.37 and 1.30 indicate 37 percent and 30 percent tech job growth over the December 2007 peak respectively. The size of bubbles in the chart above indicates the number of total non‐
farm jobs created in selected metros since the last peak. Recovery and growth of tech‐driven jobs in Southern California has been subdued. The level of tech jobs in Los Angeles just became even with its pre‐recession peak, with its recovery coefficient at 1.00. Hence, we see that the employment recovery in California has been the strongest in those metros that have a higher share of tech jobs and are more heavily invested in this industry.
BayAreaHousing
Median single‐family home prices posted healthy 8.9 percent annual growth across the Bay Area in December, according to the California Association of Realtors (C.A.R.). The C.A.R. December 2014 report also indicates that the index of unsold inventory in the Bay Area at 2.3 months remains at historically tight levels, and much lower than the 4.4 months for the state as a whole, and the 4.9 months in the Los Angeles Metro, and 5.8 months in the Inland Empire.
Double‐digit growth in 1‐unit home prices was prevalent in six out of nine Bay Area counties due to a continuous inflow of high‐paid migrants into the region, rising personal incomes, and low interest rates. In December, the largest annual price increase of 13.8 percent was recorded in Alameda, followed by Sonoma, Marin, and Contra Costa counties as more buyers want to move and settle in the Bay Area.
We expect the Bay Area housing market to grow at a moderate pace due to diminishing housing affordability and a general lack of buildable land. There has also been a sudden spike in housing inventory supply of multi‐family (5+ units) residential buildings in San Francisco that may have been partly driven by concerns regarding Proposition G (failed on November
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4th), the proposed transfer tax penalty on multi‐family property sales in San Francisco, that is likely to weigh on housing starts over the near‐term.
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SouthernCalifornia Southern California’s economy continues growing at a steady pace. The combined region of Los Angeles, Orange, San Bernardino, San Diego, Riverside, and Ventura counties is vast, home to 21.6 million Californians, or two‐thirds of the state’s population. The net migration in the region has been positive since the end of the Great Recession, around 20K net new migrants a year. The Southern California economy reached an inflation‐adjusted $1.0 trillion in the third quarter of 2014, comparable to the size of Mexico, South Korea and Indonesia.
The six‐county region employed 8.65 million nonfarm employees in December 2014, up by 176,500 jobs or 2.1 percent from last December, consistent with the state average growth but noticeably slower than the Bay Area.
Southern California’s unemployment rate dropped to 7.0 percent in December 2014 from a seasonally adjusted 8.3 percent a year ago. Southern California’s strongest job growth took place in professional and business services and educational and health services, adding 52,500 jobs and 48,800 jobs respectively.
Government employment increased at a subdued 0.2 percent from December 2013, adding only 2,500 jobs in the region. The manufacturing sector struggles in this region, shrinking by 2,100 jobs during last twelve months alone. This 30‐year downward‐slopping trend in Southern California manufacturing jobs is being driven by increased competition from low‐cost manufacturing countries like China, the high regional cost of labor, hefty state and local environmental regulations, and automation of the production process.
So. CALIFORNIA 2012 2013 2014e 2015f 2016f
LABOR MARKET Employment Growth 2.6% 2.8% 2.1% 2.3% 2.1%Unemployment Rate 10.2% 8.9% 7.5% 6.7% 6.4%
INCOME TRENDS Personal Income Growth 6.5% 2.3% 4.4% 6.4% 6.2%Median HH Income 62,176 64,140 64,510 66,730 69,230
HOUSING MARKET Housing Starts Growth 16.7% 39.7% 2.2% 25.0% 20.7%Med. 1‐Unit Home Price 2.6% 23.3% 10.6% 5.8% 3.2%
DEMOGRAPHICS Population Growth 0.5% 0.6% 0.8% 0.8% 0.8%Net Migration 000’s 34.0 20.2 20.3 24.4 45.9
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Heavy investment in new equipment, software and technology prevents large‐scale industrial job creation in the region despite solid post‐recession growth of the local economy.
Professional and business services, healthcare, construction, trade and transportation, and tourism sectors are projected to lead employment growth in Southern California over the next two years.
TourismSolidinSouthernCaliforniaSouthern California still attracts the largest share of domestic and foreign visitors traveling to California. Tourism is vital for Southern California’s economy, and four consecutive record‐setting years of visitors’ growth makes this region a global tourism destination. Total direct travel spending in Southern California reached $52 billion in 2013, comprising nearly half of total travel spending in California ($109.6 billion), according to Dean Runyan Associates.
The leisure and hospitality sector added 24,000 jobs in the region during the last twelve months, growing 2.5 percent. This included arts, entertainment and recreation, accommodation, and food services and drinking places subsectors. Full‐service restaurants and other limited‐service eating places employ 75 percent of employees in the leisure and hospitality sector in the six‐county region.
In 2014, a record 70.7 million passengers traveled through Los Angeles International Airport (LAX), of which 43.4 million visitors selected Los Angeles as their final destination. This was up from 66.7 million passengers in 2013. Modernization and expansion of LAX made possible this robust visitation growth that will have a noticeably positive impact on the regional economy through increased visitors spending.
To accommodate the growing number of tourists visiting the Golden State, demand for hotel construction is projected to increase, creating additional construction‐ and hospitality‐related jobs.
SouthernCaliforniaHousing
Home prices extended gains across all counties in Southern California over the last 12 months.
According the California Association of Realtors data, home prices ranged from a subdued 0.9 percent increase in Orange County to a stronger 8.5 percent increase in San Bernardino since December 2013. Inland Empire home prices were helped by the solid economic resurgence of this region and the relative availability of affordable housing.
Month’s supply of existing homes in December increased from a year ago across the region except San Diego, where it improved from 3.6 months to 3.4 months. Inland Empire has the highest levels of monthly home supply that indicates a relative deceleration of home sales activity in the region.
In 2015, we expect a moderation in Southern California home‐price growth to 5.8 percent as home ownership becomes less affordable in the region and the cost of borrowing is expected to rise starting in second half of 2015.
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CentralCoast
The Central Coast of California, comprised of Santa Barbara, Monterey, San Luis Obispo, and Santa Cruz counties, continues a self‐sustained economic recovery. The real regional GDP here totaled a record‐high $70 billion in the third quarter of 2014, up from a recession low $62.2 billion in 2009, a respectable 12.4 percent growth in five years. The payroll growth in the region picked up in the second half of 2014. The Central Coast added 8,600 nonfarm jobs over the past twelve months, a yearly increase of 1.7 percent since December 2013, slower than state average growth of 2.1 percent for the same period.
Unemployment in the Central Coast fell to 6.6 percent in December from 7.3 percent a year earlier. It improved across all four counties and most notably in Santa Cruz, where it dropped to 7.4 percent in December from 8.4 percent in December 2013. The fastest growing sector in the region was professional and business services, increasing 5.2 percent, and adding a net 3,000 jobs in one year.
Central California finally surpassed the pre‐recession peak of nonfarm employment by 4,800 jobs. The region added 44,600 nonfarm payrolls since February 2010, the recent recession low.
CentralCoastHousing
The housing market in the Central Coast has been recovering sporadically over the last twelve months, where single‐family home prices fluctuated from 6.7 percent year‐over‐year decline in Santa Barbara to double‐digit growth in Santa Cruz, where the index of unsold inventory improved to 2.4 months in December from 3.5 months a year ago.
As the Central Coast economy continues expanding,
the housing sector improvement will be an integral
part of it with increased construction activity and
moderately growing home prices. With improving
labor market conditions and growing household
incomes, we project steady growth in single‐family
home prices over the near term.
CENTRAL COAST 2012 2013 2014e 2015f 2016f
LABOR MARKET Employment Growth 2.6% 2.6% 1.5% 2.1% 2.1%Unemployment Rate 9.7% 8.3% 7.3% 6.3% 5.8%
INCOME TRENDS Personal Income Growth 6.2% 3.2% 4.1% 6.3% 6.1%Median HH Income 59,039 61,517 62,000 64,180 66,570
HOUSING MARKET Housing Starts Growth 54.4% 25.4% 45.8% 36.0% 25.1%Med. 1‐Unit Home Price 18.8% 22.3% 10.0% 5.3% 6.0%
DEMOGRAPHICS Population Growth 1.0% 0.9% 0.6% 0.7% 0.7%Net Migration 000’s 5.4 3.0 -1.6 -0.1 0.9
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TheCentralValley
California’s Central Valley economy continues to expand at a moderate pace, despite water supply concerns and critical drought in the region in 2014.
Nonfarm employment in the largest five metro areas grew by 36,800 jobs or 2.0 percent from last December. Two out of five metros posted above‐state‐average job growth. Nearly half of the jobs were created in Sacramento and one thirds of those jobs were attributable to professional and business services. The construction sector added 6,100 jobs in in Central Valley growing at a healthy 6.7 percent pace. Government employment increased by 5,700 jobs, mostly in state and local government subsectors.
Despite significant improvement in the Central Valley labor market over the past year, unemployment in the region remains at elevated levels. The seasonally adjusted unemployment rate in farm‐intensive Fresno was 10.8 percent in December, down from 12.0 percent a year ago. This is a great improvement considering the record drought impacting the region’s agricultural sectors.
Sacramento was the only metro in the Central Valley where the unemployment rate (6.6% in December) is below the state level due to its faster‐growing construction, professional and business services, manufacturing, and financial services sectors.
CentralValleyHousing
Solid home price growth has prevailed in four out of five Central Valley metro areas over the past year. Solid increases were recorded in Sacramento, Fresno, and Stockton where job creation came back to life and home prices are still relatively affordable.
We expect further improvement in the Central Valley’s labor markets over the next few years as the broad‐based economic recovery continues in California. Home price growth in the region is expected to top the state growth rate due to accelerated growth in household wealth, availability of affordable housing, and above‐average population growth. We also expect increased construction activity in the region over the next couple of years.
CENTRAL VALLEY 2012 2013 2014e 2015f 2016f
LABOR MARKET Employment Growth 2.3% 3.0% 2.3% 2.2% 2.1%Unemployment Rate 12.7% 10.9% 9.4% 8.4% 7.8%
INCOME TRENDS Personal Income Growth 6.2% 2.7% 4.3% 6.4% 6.2%Median HH Income 48,332 48,445 49,680 51,400 53,300
HOUSING MARKET Housing Starts Growth 29.3% 25.4% 8.6% 33.5% 27.5%Med. 1‐Unit Home Price 7.6% 31.2% 15.0% 7.3% 5.8%
DEMOGRAPHICS Population Growth 0.8% 0.9% 1.0% 1.1% 1.0%Net Migration 000’s 1.8 4.3 13.9 13.2 12.5
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CALIFORNIA REGIONAL ECONOMIC OUTLOOK
The discussions and information contained in this document are the opinions of BOTW chief economist Dr. Scott Anderson and economist Myasnik “Nik” Poghosyan and should not be construed or used as a specific recommendation for the investment of assets, and is not intended as an offer, or a solicitation of an offer, to purchase or sell any security or financial instrument. Nor does the information constitute advice or an expression of the Bank’s view as to whether a particular security or financial instrument is appropriate for you or meets your financial objectives. Economic and market observations and forecasts, such as those offered by Dr. Anderson and Poghosyan, reflect subjective judgments and assumptions, and unexpected events may occur. There can be no assurance that developments will transpire as forecasted. Nothing in this document should be interpreted to state or imply that past results are an indication of future performance.