Economist Magazine Down on California

Here are a few clips from the latest Economist on California's business climate. This doesn't help California lure more world companies.

"Everywhere you go in California, you hear the sound of businesspeople gnashing their teeth. California has always lost jobs to other places (one of the strong points of its economy is its capacity for creative destruction), so bleating businesspeople are nothing new. All the same, a survey for the California Business Roundtable by Bain, a management consultancy, makes damning reading: two of five bosses the consultants talked to now have an explicit policy to move jobs outside the state, with Texas being the most common destination.

This pessimism is all the more remarkable when you look at the way California—the centre of the bubble economy—has powered through the recent downturn. This year the gross state product should grow by around 4%, broadly in line with the nation's recovery. As elsewhere in America, recovery in California has been relatively jobless. Yet for most Californians the current downturn has been fairly mild, especially when set against the recession of the early 1990s. According to Stephen Levy of the Centre for Continuing Study of the California Economy, eight of the state's nine economic regions have lost fewer jobs than the nation as a whole; only Silicon Valley has done much worse (see article). Similarly, out of California's enviable range of industries, only two have been hit hard: high-tech and tourism.

And the reality may be even better than the official numbers. Jack Kyser of the Los Angeles Economic Development Corporation points out that LA County technically lost jobs in 2002 and 2003. But it is hard to measure an economy that has so few big firms (for example, there are no Fortune 500 companies based in downtown Los Angeles). And even global businesses can be hard to tie down. Until recently, Mr Kyser had thought that LA's jewellery industry sold no more than $200m-worth of trinkets; then one jeweller let drop that sales were twice that level."

More here.