Friday, March 27, 2009

California’s nightmare (12-15% Unemployment)

We are adamant that the rest of the country not use California as a model for energy. The purported growth of the state's economy was a fantasy. There has got to be a better way, this way lies disaster.
From FT Alphaville:

Things are already extremely rotten in the state of California, and are likely to worsen, according to forecasts by two teams of homegrown economists. reports, (emphasis FT Alphaville’s):

California’s unemployment rate will soar to between 12 percent and 15 percent by next spring and remain in the double digits until at least the beginning of 2012, according to forecasts released by two teams of University of California economists....

...The University of California economists are not optimistic about the outlook for either housing or non-residential real estate, SignOnSanDiego said:

UCLA projected that office markets will remain sluggish through 2010 in San Francisco and Los Angeles, 2011 in Silicon Valley and 2012 or later in San Diego County and other areas of the state.

UCSB projects double-digit declines in California home prices in 2009 and 2010.

But while UCLA believes the “continuing downturn in residential construction is leading to a shortage of housing that could help the market stabilise as early as the end of this year”, the team as UCSB expects continued forclosures.

As Dan Hamilton, director of the UCSB forecast, rather colourfully put it:

…government programs designed to help people stay in their homes are like “putting a very loose-fitting bandage over a festering sore.”

Our post "Californians Eye Carbon Revenues" (And So Do the Public Employee Unions)" links to some of our thinking on California, Cali's energy usage and CalPERS.