Construction Industry Forecasts

California has a relatively small share of its workers employed in health, education and government.  Each of these industries avoided large declines during the recession but is now sagging, as always, early in the recovery period. California has about an average share of its workers employed in manufacturing and finance. Both of these industries had huge layoffs early in the recession but are now recovering.  California has a very high share of workers in the now rapidly growing technology manufacturing sector and a relatively low share of workers in the weakest part of the finance industry – backroom credit card and mother transactions processing. California has a relatively large share of workers employed in both the leisure and hospitality and professional and technical industries.  Each of these plunged early in the recession and are now recovering strongly.

The California economy is being restrained by the still unsolved state budget deficit problem. This restraint will worsen in the next few years unless the unsustainable state spending model is changed substantially.  But a rapidly growing private economy makes the budget problem easier to solve.

The exodus of industries and jobs from California in recent years contributed to the budget problem.  People and jobs went to less expensive nearby states, boosting economic growth in the northwest and the Rocky Mountain regions. This exodus is slowing.  The economy is worse in nearby states which are still shedding jobs. The price of homes has dropped more than 30% in California.  This makes it easier to attract people to California. It also traps many people in California whose mortgage balance is more than the home’s value.