The California economy heads into 1997 with good momentum and is expected to be a bright spot in the national economy, according to a Bank of America economic outlook report released Tuesday.
Job growth picked up in 1996, gains in personal income and consumer spending were strong, and the state unemployment rate at year-end was lower than it has been since 1990, said Howard Roth, the bank's director of regional economics.
Roth noted several risks that could dampen the state economy next year, including increasing consumer debt, a large stock of foreclosed homes depressing prices, the possibility of higher interest rates and county fiscal problems.
Worst of all would be a national recession, he said, since California's prospects depend more than anything on the continued growth of the national economy. Fortunately, the national economy appears to be quite healthy after more than five years of growth, he said.
On the bright side were these 10 reasons to be confident about California, the bank said:
1. Consumer confidence for the Pacific West, including California, is now nearly as high as national average.
2. Jobs are growing fast in promising high-wage industries such as computer services, biotechnology, films, electronic components, securities brokering, multimedia and telecommunications software.
3. Job growth strengthened for the fourth year in a row in 1996; for the first time since 1990 it was stronger in the state than in the nation.
4. Unemployment was 6.9% in October 1996, down from 7.8% a year earlier, and the lowest since December 1990. It should fall further.
5. Taxable sales rose 7.6% in the first half of 1996.
6. Personal income, up 2.4% in 1993 and 3.1% in 1994, rose 6.2% in 1995 and 7.6% in the first half of 1996.
7. Exports of goods produced in the state rose 19% in 1995. High-tech exports are especially strong.
8. The number of people moving to California from other states is growing, approaching the number of Californians moving elsewhere.
9. The improved economy has increased state government tax revenues.
10. Aerospace job losses are slowing and airlines are ordering more aircraft.