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By Steve Levy

California Economic Trends and Policy Implications

Uploaded: Jun 12, 2017

Between 2012 and 2016 California captured 17.1% of U.S. job growth and 23.6% of U.S. GDP growth. While the Bay Area was the growth leader, the rest of the state also outpaced the nation in job growth.

Readers are familiar with the tech led job growth in our region. But Southern California rebounded as well led by growth in motion pictures, foreign trade related jobs and record levels of tourism and airport travel.

The state was well positioned to take advantage of U.S. growth in the three T’s—tech, trade and tourism/entertainment.

These trends have interesting implications for two national policy discussions. California’s job growth was accompanied by improved air quality in the Bay Area and Southern California and by a decline in per capita GHG emissions. These gains were the result of regulations and changers in resident behavior accompanied by technological change that improve energy efficiency and miles per gallon for vehicles.

Thus the President’s claim that regulations and the Paris agreement are job killers is refuted not only by this recent evidence but also by peer reviewed studies of the economic impact of state and Southern California air quality plans. I was one of many technical reviewers in both cases.

His claim is just wrong at the economy wide level although some individual sectors always shrink in big economic transitions.

While advocates sometimes overstate the immediate job potential of clean energy jobs, there is no question that the future belongs to the regions that can develop the next round of innovation in areas like battery technology, autonomous vehicles, transmission line efficiency, fuel efficiency and the like. When personal computers and word processing software were introduced, would you want your state to be a leader in personal computing or typewriter manufacturing?

The second policy implication deserves everyone’s attention. Most Californians understand that restrictions on immigration and foreign trade will hurt our local economy as will reductions in federal support of basic science.

Now it is time to return to the opening statistics—17.1% of national job growth and 23.6% of national GDP growth.

What happens in California affects the national economy. We are one important center of innovation, connections with the Pacific Rim and a leader in entertainment and tourism. The state and national economies are connected and what hurts one hurts the other as well.