Amid fears of a national recession, California’s once-dominant industries, including tech and supply chain logistics, have been hit hard by high interest rates, investor uncertainty, labor disputes and natural disasters.
Severe flooding caused by atmospheric rivers has caused hundreds of millions in crop losses in the Central Valley, devastating those farming communities.
The California economy, while still a powerhouse globally, continues to see corporate job cuts as Disney recently announces it will cut 7,000 jobs worldwide.
Gov. Gavin Newsom revealed that the state faces a $22.5 billion deficit in the 2023-24 fiscal year, which is a sharp drop from the $100 billion surplus seen a year ago. Despite the economic downturn, California’s economy is still stronger than most U.S. states, and areas such as software and defense goods remain resilient.
“It’s an EKG,” Newsom said, comparing a graph of the state’s revenue to the sharp spikes and drops of the heart’s electrical activity. “That sums up California’s tax structure. It sums up the boom-bust.”
Housing Crisis Remains a Key Economic Issue
Economists have predicted that the state’s rainy-day fund should be able to withstand the decline in tax revenues. However, the housing crisis remains a key economic issue, with the median value of a single-family home in California running at around $719,000.
Read more at The New York Times