Boom and Gloom: An Economic Warning for California
California’s employment volatility,
relative to the U. S. average
California’s employment volatility, relative to the U. S. average
A recession would also further expose problems that have festered for decades.
Mr. Brown already raised income taxes to address the state’s last budget mess,
and California taxpayers took a further hit as a result of the new tax bill, which curbed the deductibility of state and local taxes on federal returns.
“I don’t think there’s any reason to believe we are going to have a recession this year or the next year,” said Christopher
Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles, referring to Mr. Brown’s grim forecast.
“He’s just pointing out the obvious, which is that things feel good now
but there is going to come a time when all hell is going to break loose — and we better be ready for it.”
Mr. Brown’s statements highlight California’s distinction as a state of high highs and low lows.
“What’s out there is darkness, uncertainty, decline and recession,” Mr. Brown said recently after presenting his final budget to legislators.
And that boom-bust pattern is especially tough on California’s budget — something
that Mr. Brown, who was first elected governor more than four decades ago, knows well.