The Golden State is looking pretty shiny these days. According to new data released by the federal government Friday, California's gross domestic product went up by $127 billion in 2017, pushing it past $2.7 trillion. At the same time, the U.K.'s economic output shrank slightly, due in part to currency fluctuations.
According to Beacon Economics Economist Robert Kleinhenz, California's economy is on a good track to continue the economic growth over the next few years.
"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."
However, challenges in California remain, including a lack of housing construction, which Kleinhenz argues is California's biggest problem right now.
"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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