Gov. Arnold Schwarzenegger declared last week that “the worst is over for California’s economy” and predicted happy days ahead, saying, “Our economy is well-positioned to take advantage of the future.”
Not so fast. Schwarzenegger once again has allowed his characteristic optimism — or hubris — to cloud what should be his better judgment.
The best one can say is that the state’s deepest recession since the Great Depression may — repeat, may — have finally touched bottom. That’s what the University of Pacific’s economic forecasting service said this week, but other economists who study the state have yet to agree.
Even Pacific’s forecast quickly points out that the recession is still raging in many of the state’s regions and that unemployment, which doubled during the recession and is the most evident aspect of economic decline, is likely to increase this year.
Not only is the worst not over, but we could see even worse economic times in 2010 as new waves of home foreclosures hit and as commercial real state takes a similar hit.
Even as Schwarzenegger was declaring that California’s economy would rebound, he also was telling legislators in his State of the State address that he’s launching a new economic plan (on top of the dozens of other economic development schemes already on the books) centered on targeted tax breaks and job training — more symbolism than sound economic theory.
The unvarnished fact is that California’s economy is likely to recover, if it does recover, much more slowly than those of other states. Not only was the housing meltdown centered in California, but also we seem to have made ourselves less competitive in what is now a global economy.
Our transportation network has the worst traffic congestion and the second worst pavement conditions in the country. Our taxes are among the nation’s highest and our academic achievement scores are among its lowest. We have achieved a dubious global reputation for regulatory complexity.
Schwarzenegger and other Capitol politicians have driven our credit rating to the lowest of any state, thanks to their irresponsibility on the deficit-ridden state budget and on approving more bonds than the market can absorb.
While our universities remain a stellar plus and Silicon Valley continues to lead in technological innovation, we are ill positioned to attract good-paying middle-class jobs.
The state’s last auto assembly plant is being shuttered and the last aerospace corporation to call California home just announced that it’s moving its headquarters to the Washington, D.C. area. Almost all aspects of the agricultural segment are hurting, largely due to competition from abroad. The housing industry is an economic disaster area.
“Well positioned to take advantage of the future?” Not by a long shot. Unless we get our act together quickly, we’ll be only well positioned to become the next Michigan.
Distributed by Scripps Howard News Service, www.scrippsnews.com.