As an economist , I found their presentation/forecasts unobjectionable and very insightful in places. Ideally one would want to see more detailed forecasts, but that requires and economic model of SD and that probably does not exist. In short, this PDF should be read by all.
Being non-local , I did not realise from reading this forum that the SD unemployment rate has already risen so much during 06 and 07 (and unemployment is a lagging indicator!) and that sales of goods (‘taxable goods’) has been weak. In that respect , SD seems to have been having an economic decline before the rest of the US and this may explain why SD house prices started coming off the top so early and the housing boom carried on for much longer elsewhere (eg LA). BUT was the weakness just caused by the the first stage of the popping of the housing bubble . Slide 18 is weak. The scatter diagram does not show necessarily that sales of goods declined in recent years because of events in the housing market(ie it does not show which direction causality was), although that could be the case. Rich may be able to shed light on that . Were there other negative drivers at the time or was housing the only one: in which case causation must have been from bubble-popping.
It is very worrying to see from the state’s financial figures that Cal is coming out from a boom time with such a a large deficit . Had everyone in charge forgotten the tale of seven years of plenty and what you are supposed to do in that period. The obvious fear is that there may be a special Cal kicker to the recession as taxes are raised or public services cut back: perhaps on a large scale. What do you think Rich? For now I notice that big time bottom pickers are now investing in bombed out California muni bonds so they expect the state to pull itself together in some way.
One little extension of the presentation worth making concerns exports. Yes an export surge will occur due to the weak dollar and strength left in some parts of the world. But note that an export boom generated by a weak currency implies a loss of living standards (via cuts in inflation adjusted earnings) for the inhabitants of the country on average; even if the export-intensive areas do well. In other words it is perfectly possible to have a export boom, preventing a worsening of the recession and keeping more jobs than you might expect , but people overall will feel poorer and this of course is consistent with the general housing market correction proceeding uninterrupted .
Did you see the commercial real estate price and rent chart by the way? That market looks exactly as overblown as the residential real estate market has been.
