A chokehold on housing development threatens to knock California from its position as a national leader for economic growth, according to a report published Thursday by the Center for Economic Research and Forecasting at California Lutheran University.
“What is amazing about analyzing recent California macro indicators is that the state’s economy is slowing even faster than the nation’s,” Dan Hamilton, director of economics at the research center, wrote in an essay summarizing the forecast.
The next two years will see job growth fall to 1.3 percent, the center predicted, closing the gap between California and the greater U.S. Historically, the state has enjoyed above-average employment growth compared to the rest of the country, but the metrics are likely to slip in light of an exodus of individuals and businesses from California to more affordable regions, center Executive Director Matthew Fienup wrote in an analysis. He cited layoffs announced in March at Thousand Oaks-based biotech Amgen Inc., which would cut down its local operations by roughly 10 percent, as a prominent example.
“Thousand Oaks and surrounding Ventura County, where Amgen was founded, boasts the most stringent urban containment policies of any county in the United States,” Fienup wrote. The promise that such regulations would enable a higher quality of life that appealed to other leading employers has “proven hollow,” he added.
One indicator of the pending slowdown comes from the Bay Area, a “significant driver” of the state’s economic edge over the rest of the U.S., Hamilton said. Data from the San Francisco metro area indicates that the year-over-year job growth rate dropped from 4.6 percent to 1.6 percent in 15 months.
“This is a very rapid change, especially for one that is being driven by internal factors, as there is no identifiable external shock,” Hamilton wrote.
If the center’s estimates of 2.6 percent GDP growth in the state for the second quarter are correct, average growth for the first half of the year will be 1.3 percent – indicative of a weak economy, Hamilton said. He noted that the estimates would be updated in November.