Newspaper article The Christian Science Monitor
Golden State Sees Hope of Economic Recovery Californians Are Upbeat about Improvement, but Wary of Hints Clinton May Move Slowly
THE world's seventh-largest economy is looking for a jump-start from the Clinton administration. Though the Golden State is languishing deeper in recession than the rest of the nation, many think it may get one.
"There is already a business upturn we are calling the Clinton bounce," says Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. Because of Clinton's stance on converting defense-related jobs to other applications, his focus on infrastructure improvement, and his ideas for moving high-tech products into commercial markets faster, Mr. Kyser says expectation is running high.
There is also the prospect of a stimulus package that could include lower interest rates - which would significantly aid the stalled real estate market - and $30 billion to $50 billion in federal outlays that may translate into anything from public-works projects to more grants-in-aid for state and local governments.
But President-elect Clinton has stated he may reevaluate the need for an immediate package because of recently revised figures for 1992's third-quarter growth in gross domestic product, up sharply to 3.9 percent from an estimated 2.7 percent. Such wavering has many in California concerned.
"During the next three to six months Clinton will be making choices that will determine short- and long-term prospects for California throughout the '90s," says Robert Arnold, chief economist for the Center for the Continuing Study of the California Economy (CCSCE). He counsels against letting recent upturns take the edge off pushes for economic stimulus.
"This state needs a very vigorous recovery to get back to the growth path we were on before 1990," he says. The growth rates that pulled the state out of recessions in 1971-72, 1975-76, and 1982-83 were between 5 and 6 percent, he says.
A recovery of 2 to 3 percent a year would keep the state well below its growth potential and not allow it to recover losses.
Since 1990, California has lost more than 750,000 jobs. Without recession, 1980s growth rates would have provided nearly 300,000 new jobs. Some estimates, then, argue that the state is missing over a million jobs.
Both the CCSCE and the business forecasting unit at the University of California, Los Angeles, view economic stimulation as essential for a return to the previous growth path. …