Newspaper article The Christian Science Monitor

Don't Believe All You Hear about California Economy ; despite Gloomy Portrayals by Candidates for Governor, the State Is Staging a Recovery

Newspaper article The Christian Science Monitor

Don't Believe All You Hear about California Economy ; despite Gloomy Portrayals by Candidates for Governor, the State Is Staging a Recovery

Article excerpt

Last February the softwaremaker Electronic Arts went looking for a new site to consolidate three company operations into a state-of- the-art digital gaming studio. The California firm, worth an estimated $13 billion, came to a decision three weeks ago. The winner: Playa Vista, an enclave of Los Angeles.

The maker of electronic video games decided to stay in the Golden State largely because of the labor force. "L.A. has a phenomenal talent base," says John Batter, a vice president and general manager of the firm's Los Angeles operation.

To hear the gubernatorial candidates talk about it, you'd think California has become a Third World nation, a Bangladesh where people wear a lot of spandex. As the would-be governors pitch their wares for the Oct. 7 recall, they tell the same bedtime story: How the California dream has turned into a nightmare.

Yet their gloomy scenarios may be a bit melodramatic, even by California standards. True, the state is facing a serious budget problem and, like the rest of the nation, is struggling to pull itself out of an economic hole.

But the economy here is doing better than many states, and California still has some built-in strengths that others don't. Successes like Electronic Arts or Lockheed Corp. - busy building 100 C-17 military cargo planes in Long Beach - were created by a hothouse of growth ingredients that only California can serve up: a pool of educated workers, prestigious universities, great weather, entrepreneurial vigor, and a walletfull of venture capital.

It's the formula generating a $1.36 trillion economy - the fifth largest in the world. It draws 40 percent of the nation's venture capital to the state and has helped create an explosive housing market as well as awaken the slumbering high-tech industry.

It's gathering momentum despite the continued effects from the Sept. 11 terror attacks, a national economic downturn, the impact of the SARS epidemic on state travel and business, and the effects of the Iraq war.

Still, there are concerns in the corporate community - notably, the "hostile business environment" in Sacramento. "It's the inherent strength of the California economy trying to overcome [a drag on it]," says Jack Kyser, chief economist at the nonprofit Los Angeles County Economic Development Corporation. "It's like a high-powered vehicle stuck in a ditch. It's trying to get traction."

Political one-liners aside, the state is showing some verve:

* Job creation in California beat the rest of the nation for the last three years, according to the Center for Continuing Study of the California Economy in Palo Alto. Since May 2000, the state has lost 20.7 percent of its computer and electronic manufacturing jobs, while the US has lost 21. …

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