current state of the economy and economic outlook november ... · 11/15/2012 1 current state of the...
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Current State of
the Economy and
Economic Outlook for
CaliforniaMark Schniepp Director
November 13, 2012
Main Themes for Today
• Recent evidence on the U.S. economy• The California Recovery
-- what sectors are contributing to job gains-- what about in the future?
• California Demographics: What can we expect over the next 5 years, or longer?
• The State’s Community College System:-- why is enrollment dropping sharply ?-- the outlook
• Updated forecast for California
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GDP growth Q3
Slower Growth this time around
1975
1982
1991
2001
2009
3.2%
4.7%
3.4%
3.0%
2.1%
3.7%
4.5%
3.3%
2.9%
2.5%
Real GDP
Real Con-sumption
RecessionEnding
3.3%
2.6%
2.0%
1.2%
1.0%
Employ-ment
Average Annual Growth Rates 5 year period following recession
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Conundrum• 57 percent of Americans still believe we’re
in a recession
• Median Household Income (adjusted for inflation) fell 1.5 percent in 2011, slightly more for families
• Poverty level in U.S. remains stuck at 15 percent, highest since 1993
• Unemployment rates still abnormally high
7.9 %
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U.S. Economic Summary
• There’s a lot to like about the U.S. recovery now
• Consumer confidence unusually strong
• Car sales and home sales- strong retail sales growth in August and September- massive iPhone5 sales
• Export slowdown may be over- Demand for phones, tablets picking up in Asia- Worst of the European recession may be
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September 2002- September 2012
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expanding
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Moody’s / September 2012
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4.5 million(last 32 months)
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1.61percent
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Los Angeles Times / September 5, 2012 / page B1
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U.S. Recent Evidence
• Growth likely to pick up after election
• Generally, most economic indicators show improvement
• Inflation contained
• Consumers feel better, are more optimistic
. . . . . they’re buying more cars and other stuff
• The housing sector rebound is accelerating
• Though hiring continues on (32 straight months) it’s weak despite a falling
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What about
California?
We’rein
trouble
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498,000 Jobs(30 months)
Los Angeles TimesOctober 20, 2012page B1
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Recent Evidence / California
• Job creation dominant in coastal California
• Technology sector leading the charge
• Public sector still downsizing
• Exports are explosive from CA ports
• Tourism also rising in all major markets, job creation has been stellar
• Demographics are largely responsible for the abnormally high unemployment rates in California at 10 2 %
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Focus on the
Labor MarketWhere are the jobs ?
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Ventura County Star / August 16, 2012 / front page
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Restructuring, and what that
means• Construction
-- largest contraction of any sector since 2008-- some recovery of jobs will occur
• Manufacturing -- minimal recovery will occur-- technology replaces people-- outsourcing displaces the local workforce-- California unfriendly to mfg, industrial sectors
• Therefore, what does the workforce look like in the future ?
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California
California
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California
ISPs and Web Search
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Top, high paying Jobs of the future10 Optometrists
9 Physical Therapists
8 Veterinarians
7 Medical Scientists
6 Dental Hygienists
5 Market Research Analysts
4 Diagnostic Medical Sonographers
3 Biomedical Engineers
2 Actuaries and Statisticians
1 Nanotechnology Specialists
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CommunityCollege UpdateEnrollment, Budget,
Future Demand
2.0
2.2
2.4
2.6
2.8
3.0
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Total FTES Enrollment California Community Colleges
Fall 1993 - Fall 2011
millions of students
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Factors Affecting CC Enrollment
• Pool of graduating 12th graders in the region
• Per unit fees- did not have much impact on FTE students
• Economy had a negative correlation on part time student enrollment- Less enrollment of PT students when the economy created more jobs and the unemployment rate fell
• 18-24 year old population growth
- 25 to 34 population growth a factor for some colleges
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200
240
280
320
360
400
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020
High School Graduates / California Fall 1980 - Fall 2020
thousands of graduates
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5.50
5.75
6.00
6.25
6.50
6.75
7.00
7.25
2005 2006 2007 2008 2009 2010 2011
Total Expenditures California Community Colleges
FY 2005 - FY 2011
billions of dollars
4.50
4.75
5.00
5.25
5.50
5.75
6.00
6.25
2005 2006 2007 2008 2009 2010 2011
Salaries and Employee Benefits California Community Colleges
FY 2005 - FY 2011
billions of dollars
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800
850
900
950
1,000
1,050
2005 2006 2007 2008 2009 2010 2011
Operating Expenditures California Community Colleges
FY 2005 - FY 2011
millions of dollars
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011
Capital Outalys California Community Colleges
FY 2005 - FY 2011
millions of dollars
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5.75
6.25
6.75
7.25
7.75
2005 2006 2007 2008 2009 2010 2011
Total Revenues California Community Colleges
FY 2005 - FY 2011
billions of dollars
2.50
3.00
3.50
4.00
4.50
2005 2006 2007 2008 2009 2010 2011
Revenues by Selected Source California Community Colleges
FY 2005 - FY 2011
billions of dollars
State
Local
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Local Bond Measures / November 2012
PassedRancho Santiago (Orange County)Solano (Yolo / Solano Counties)West Hills (Fresno / Kings Counties)Total
FailedMiraCosta (San Diego County)
198348
13559
497
Community College DistrictBond Amount
($ millions)
0
10
20
30
40
50
1984 1988 1992 1996 2000 2004 2008 2012
Fees per Unit California Community Colleges
Fall 1984 - Fall 2012
dollars per unit
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0
25
50
75
100
125
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Distance Education / Total FTES Enrollment California Community Colleges
Fall 1993 - Fall 2011
thousands of students
Recent Enrollment TrendsSince Fall 2008• Total enrollment down 470,000 FTES (16 %)
• Tuition up 130 %
• Class offerings down 24 %
• Distance enrollment down 3,100 FTES (3 %)
• Enrollment lower for all age groups, all racial/ethnic groups, and both genders
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100
300
500
700
900
1,100
1,300
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
FTES Enrollment by Age California Community Colleges
Fall 1993 - Fall 2011
thousands of students
18 to 24
35 to 49
25 to 34
50 and Up
30
35
40
45
50
55
60
65
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
FTES Enrollment by Age California Community Colleges
Fall 1993 - Fall 2011
percent of all students
18 to 29
30 and up
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43
45
47
49
51
53
55
57
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
FTES Enrollment by Gender California Community Colleges
Fall 1993 - Fall 2011
percent of all students
Male
Female
3.85
3.90
3.95
4.00
4.05
2010 2015 2020 2025
Population 18 to 24 / California 2010 - 2025
millions of people
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5.2
5.4
5.6
5.8
6.0
6.2
6.4
2010 2015 2020 2025
Population 25 to 34 / California 2010 - 2025
millions of people
10.2
10.4
10.6
10.8
11.0
11.2
2010 2015 2020 2025
Population 35 to 54 / California 2010 - 2025
millions of people
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7.5
8.5
9.5
10.5
11.5
12.5
2010 2015 2020 2025
Population 55+ / California 2010 - 2025
millions of people
2013 OutlookFor California
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The forecast for California
• Momentum has clearly picked up in 2012
• Businesses are hiring though there is reluctance to hire any but the most qualified
• Expect elevated unemployment rates to persist
• Housing will play a larger role in economic growth. You’ll see:
• More home sales and rising prices
• Less distressed housing
• A tighter rental housing market
The forecast for California
• The 18 to 24 year old population reaches all time high in 2014-2015
• Demand for colleges and universities will decline thereafter for about 5-6 years
• Construction industry gets busy in 2014-2015 as more housing is underway
• More non-residential structures started in 2016
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+ 2.3+ 3.1
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80
90
100
110
120
2009 2010 2011 2012 2013 2014 2015 2016 2017
California General Fund FY 2009 - FY 2017
billions of dollars
Expenditures
Revenues
forecast
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Summary / California
• Prop 30 has partially delayed major budget cuts to the state’s public education system
• Nevertheless, slower economic growth will likely constrain income, sales tax receipts to the state
• Fewer jobs created in 2013; then more in 2014
• Technology is the principal engine of growth
• Housing demand accelerates
• What about the Fiscal Cliff . . . . . . ?
Los Angeles Times, June 8, 2012,Front page
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The “Fiscal Cliff”Changes to Revenue Policy Billions $
Expiration of "Bush Tax Cuts" 221$
Expiration of "Payroll Tax Cut" 95$
Taxes in the Affordable Care Act 18$
Other Expiring Provisions 65$
Changes to Spending Policy
Budget Control Act Sequestration 65$
Expiration of Emergency Unemployment Benefits 26$
Reduction in Medicare Payments to Physicians 11$
501$
Percentage of GDP 3.25%
2012 CaliforniaEconomic &
Demographic Update