The Hidden Gloom Underlying California’s ‘Boom’

Hoover Institution research fellow Carson Bruno studies California’s political and policy landscape:

Good news, in 2013, California’s economy grew faster than the nation’s – 2 percent vs. 1.8 percent. Many have used this as vindication that California’s progressive policies, ranging from the 2012 Proposition 30 tax increases to implementation of AB 32’s cap-and-trade scheme, are not hindering growth (some even suggest such policies are aiding the growth).

However, focusing on the statewide number masks the bad news; California’s growth is vastly inconsistent across its regions. And if we explore those differences – using Bureau of Economic Analysis 2001-to-2012 metropolitan-area statistics adjusted for inflation using the CPI-U-RS – the Golden State looks like an awkward composition of extraordinary growth, stagnation, and decline.

Here is what Bruno had to say about Rural Northern California.

Inland Empire vs. Central Coast vs. Greater Sacramento vs. Wine Country vs. Rural NorCal:

These lessor known parts of the Golden State have fared even worse than their more heavily populated and famous neighbors. Indeed, since 2010, on average, these economies have actually shrunk (-0.2 percent). The Inland Empire leads the pack (at just 0.2 percent since 2010), followed by the Central Coast and Greater Sacramento, both at 0.1 percent. But both Wine Country and Rural NorCal have shrunk (-0.4 percent and -1.1 percent, respectively).

Not only are many parts of California struggling, but it is the most under-represented areas in California’s political discourse that are really suffering. And more disturbing is California’s over-reliance on just one region: Silicon Valley. Indeed, between 2002 and 2012, Silicon Valley accounted for, on average, over one-quarter of California’s total economic growth. And since 2010, that has increased to 56 percent, on average. Removing the region reduces California’s 2010-2012 average annual real GDP growth of 1.4 percent to 0.9 percent.

My emphasis added. From an economic view point, one can understand The State of Jefferson movement more clearly. The Silicon Valley economic performance is masking the state’s real poverty,  crumbling infrastructure, and growing business hostility in the region, which Sacramento seems to gleefully ignore.

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About Russ Steele

Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.
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3 Responses to The Hidden Gloom Underlying California’s ‘Boom’

  1. Sean says:

    The true irony of the California comeback is that its a result of the rich getting much richer and the poor getting poorer, just not quite as fast. Neil kashkari’s campaign stunt where he spent a week in Fresno with $40 in his pocket and a change of clothes in his knapsack resulted in him being unable to find any work. California has become a state where high margin high tech work flourishes and where blue collar jobs are tied up in a regulatory morass with constantly increasing costs. A few winners and a lot of losers.

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    • Russ Steele says:

      Unfortunately, this is the case. Now how do we fix the problem? Unlikely that voters are going to change the ruling class in Sacramento.

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  2. gjrebane says:

    Not only Sacramento, but the state’s progressives, from the great to the small, are “gleefully ignoring” the state’s real economy and its extremely uneven make-up.

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