Economists See Bright Future Ahead For California's Economy in 2018

Experts say California's economic engine will continue to chug along and generate ongoing economic growth for the rest of 2018. According to Beacon Economics Economist Robert Kleinhenz, California's economy is on a good track to continue the economic growth we've seen for the rest of the year. 

"It'll be bumping up against some constraints, mainly in the form of labor force growth, which has slowed a little bit as we've reached full employment." Kleinhenz said. "But the state and its regions are poised to grow throughout 2018. There's every expectation that will continue into 2019." 

Professional and business services sectors in San Diego and San Francisco are all increasing while construction jobs grew in San Jose and San Diego. Kleinhenz says while things are looking good, there are things out of our control. 

"We think that the economic ship is going to go forward no matter what, but we certainly are mindful of the talk coming from Washington D.C. regarding trade." said Kleinhenz. "The housing market looks good, although there's a very lean supply of existing homes." 

And a lack of housing construction is California's biggest problem right now, Kleinhenz says. 

"Construction is picking up, arguably the housing market is still underperforming. We need a lot more housing in California, about 200,000 units per year, and we're only building about 125,000 this year," Kleinhenz said. 

Because of the lean housing market, home prices are expected to increase anywhere from five percent to 15 percent in regions like San Diego and San Francisco throughout 2019. Kleinhenz says the tight labor market and the lack of housing supply could slow or hinder future growth through the Golden State. 

Despite that, Kleinhenz says the economic outlook for California is bright. 

"When you look across the state, every region of the state is generally exhibiting growth.  And at the state level I might add, every industry in the state has been adding jobs in year-over-year terms, even though there might be some blips in month-to-month terms." 

Since 2010, California has accounted for nearly 20 percent of the nation's economic grown, outpacing its population and overall output. 

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