1. John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP
National & California Economies
John Husing, Ph.D.
Economics & Politics, Inc.
Chief Economist, IEEP

2. After Losing 8. 71 Million Jobs … Now At A Record Level of Jobs U. S
After Losing 8.71 Million Jobs … Now At A Record Level of Jobs U.S. Jobs Long Slow Growth - Not Over-Heating

3. Gross Domestic Product Very Slow Growth

4. Current Consumer Confidence Very High!
128.5

5. Oil Prices: Low But Roughly Stable
$45.00

6. Consumer Quite Aggressive

7. Residential Construction Spending Gaining Speed

8. Value of the Dollar: Helps Imports & Hurts Exports
100.0 %

9. Looking Six Month Ahead Consumer Confidence Lagging
87.8

10. Business Investment Spending Weak

11. Orders, Non-Defense Capital Goods Slowly Declining

12. Mfg. Purchasing Manager’s Index Weakening!

13. Industrial Capacity Utilization: Slack
Full Capacity
82.5%
75.5%

14. U.S. Unemployment History
Prime Rate: 21%
Cold War Ends
Great Recession

15. Consumer Price Stable: Below 2.0%
Fed Target
1.1%

16. Interest Rate Environment
3.46%
1.62%

17. Required FICO Scores – 30 Year Fixed Fannie Mae
Share of Income: 36% or less … 680 if LTV 75% … 620 if Less
Share of Income: 45% or less … 700 if LTV 75% … 640 if Less
Issue: Maximum Allowable Confirming Loan Levels
FICO Report
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
6.6%
6.5%
7.1%
7.2%
7.4%
6.9%
6.2%
6.0%
5.8%
5.2%
5.0%
8.0%
8.2%
8.7%
9.0%
8.5%
8.4%
7.9%
8.8%
9.1%
9.6%
9.8%
9.9%
9.5%
9.2%
10.2%
9.7%
10.0%
10.1%
10.3%
12.8%
12.5%
12.1%
12.0%
11.9%
12.2%
12.7%
13.0%
16.4%
16.3%
16.2%
16.0%
15.9%
15.7%
15.5%
16.6%
16.8%
20.1%
19.8%
19.6%
19.4%
19.5%
18.8%
18.4%
18.1%
18.3%
16.9%
17.9%
18.7%
18.2%
18.6%
20.0%
Total
100.0%
68.1%
55.1%

18. U.S. Home Sales Remain Relatively Weak

19. U.S. Median Home Prices Soaring!

21. California Job Gains/LossesUp
1,074,272
6.8% Up
2007
15,844,325
2016
16,918,587
Recovery
2,253,330
Great
Recession
-1,179,058

22. U.S. & CA Unemployment History
Prime Rate: 21%
Cold War Ends
Great Recession

23. CA’s East-West Split in Prosperity
San Francisco-Oakland-Fremont
4.10%
Bay Area
San Jose-Sunnyvale-Santa Clara
Napa
Orange County
4.40%
So. Coast
San Luis Obispo-Paso Robles
4.60%
No. Coast
Santa Barbara-Santa Maria-Goleta
4.80%
San Diego-Carlsbad-San Marcos
5.00%
Los Angeles County
5.30%
Sacramento-Arden-Arcade-Roseville
5.50%
No. Inland
Salinas-Monterey
5.70%
Vallejo-Fairfield
Oxnard-Thousand Oaks-Ventura
5.80%
Santa Cruz-Watsonville
Riverside-San Bernardino-Ontario
6.60%
So. Inland
Chico
6.70%
Redding
6.80%
Stockton
7.80%
Central
Modesto
8.00%
Yuba City
8.10%
Madera-Chowchilla
8.30%
Fresno
8.70%
Hanford-Corcoran
8.90%
Merced
9.30%
Bakersfield-Delano
9.70%
Visalia-Porterville
10.70%
North
El Centro
23.80%

24. Job Quality & Income Split 2011-2016e Growth Period

25. Gold Mine Theory
Secondary Tier
Primary Tier

26. Science, Technology, Math, Engineering

27. STEM - Strong Job Growth!
15.3%

28. Office Vacancy/SF Absorption Bay Area – Rest of CA Split!
2016Q2
Sacramento 15.8% ,000
Inland Empire % ,000
Central Valley 14.0% ,000
L.A. Co % 1,200,000
San Diego % ,000
Orange Co % ,000
Contra Costa 8.7% ,000
SF Peninsula 8.0% ,000
Silicon Valley 7.9% ,000
Alameda Co % ,000
San Francisco 6.3% ,000

29. Health Care

30. Physician Availability, CA Regions, 2013

31. Share of Adults, 18-64, No Health Insurance By California Region, 2012 vs. 2015

32. Health Care - Strong Job Growth!
9.4%

33. Construction: Slowly Coming Back

34. Housing Permits, Single Family Residential Seasonally Adjusted Annual Rate

35. Change In Sales Demand vs. Supply of Active Listings August 2015-2016
Active Listings: Supply 8% 7% 6%
-2%
-4%
-9%
Bay Area Southern California Central Valley

36. Months of Housing Supply Available
By California Region
Bay Area
So. CA
Central Valley
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
3.6
3.2
2.4

37. CA: State Prices Almost All The Way Back
Median Price Existing Detached Homes,
$594,530
$526,580
5.8%
-11.4%
$497,520
$245,230
-59%

38. High Priced Bay Area & Central Coast
Affordability
Median Price
Payment
Required Income
San Francisco
13%
$1,375,000
$6,740
$269,601
San Mateo
14%
$1,330,000
$6,519
$260,778
Marin
18%
$1,225,000
$6,005
$240,190
Santa Clara
19%
$1,085,000
$5,318
$212,740
Alameda
20%
$825,700
$4,047
$161,898
Napa
25%
$630,000
$3,088
$123,526
Contra-Costa
32%
$628,150
$3,079
$123,164
Sonoma
26%
$585,000
$2,868
$114,703
Solano
45%
$386,000
$1,892
$75,684
U.S. = $307,454
Central Coast
Affordability
Median Price
Payment
Required Income
Santa Cruz
17%
$799,000
$3,917
$156,663
Santa Barbara
20%
$703,460
$3,448
$137,930
San Luis Obispo
27%
$546,620
$2,679
$107,178
Monterey
25%
$535,000
$2,622
$104,899

39. Mix Priced So. California Modestly Priced Central Valley
Affordability
Median Price
Payment
Required Income
Orange County
22%
$742,220
$3,638
$145,530
Ventura
29%
$647,320
$3,173
$126,922
San Diego
26%
$589,910
$2,892
$115,666
Los Angeles
30%
$480,040
$2,353
$94,123
Riverside County
41%
$355,320
$1,742
$69,669
San Bernardino
56%
$242,370
$1,188
$47,522
U.S. = $307,454
Central Valley
Affordability
Median Price
Payment
Required Income
Placer County
46%
$438,490
$2,149
$85,976
Sacramento
45%
$323,710
$1,587
$63,471
San Joaquin
$313,840
$1,538
$61,536
Stanislaus
48%
$271,940
$1,333
$53,320
Fresno
50%
$235,020
$1,152
$46,081
Kern (Bakersfield)
54%
$228,950
$1,122
$44,891
Madera
$221,700
$1,087
$43,469
Kings County
56%
$212,660
$1,042
$41,697
Merced
52%
$212,080
$1,040
$41,583
Tulare
$207,700
$1,018
$40,724

40. Construction - Strong Job Growth!
9.2%

41. Logistics Flow of Goods

42. Port Container Volumes On Pace For Import Record

43. Fulfillment Centers

44. E-Commerce Growth Rates Year Over Year by Quarter

45. Logistics - Strong Job Growth!
8.7%

46. Manufacturing: Should Be A Major Growth Source

47. California Manufacturing Job Growth Just 5.4% of U.S. Growth

49. CA Is Not Loved By Executives & Entrepreneurs

50. Manufacturing Poor Job Growth!
1.9%

51. Industrial Vacancy Rate Low Almost Everywhere!
2016Q4
Sacramento 8.5%
San Diego %
Inland Empire %
Central Valley 2.0%
Orange Co %
Silicon Valley 1.4%
SF Peninsula 1.2%
L.A. Co. 1.1%

52. Industrial Absorption Sq. Feet Largely Related To So. CA Ports
Inland Empire million
Central Valley million
L.A. Co million
Sacramento million
Silicon Valley million
Orange Co million
San Diego million
SF Peninsula million

53. Political Key: 42-45 Votes of 80
Moderate Democrats from Poor Districts:
Their Party is Hurting Their Constituents (14-17)
Combined With Republicans Create Legislation Rolling Back Regulators (28)
CEQA
AQMD
CARB

54. Economic Impact?