After nearly five years of brutal economic decline, government retrenchment and a widespread loss of confidence in its future, California is showing the first signs of a rebound. There is evidence of job growth, economic stability, a resurgent housing market and rising spirits in a state that was among the worst hit by the recession.
California reported a 10.1 percent unemployment rate last month, down from 11.5 percent in October 2011 and the lowest since February 2009. In September, California had its biggest month-to-month drop in unemployment in the 36 years the state has collected statistics, from 10.6 percent to 10.2 percent, though the state still has the third-highest jobless rate in the nation.
The housing market, whose collapse in a storm of foreclosures helped worsen the economic decline, has snapped back in many, though not all, parts of the state. Houses are sitting on the market for a shorter time and selling at higher prices, and new home construction is rising. Home sales rose 25 percent in Southern California in October compared with a year earlier.
After years of spending cuts and annual state budget deficits larger than the entire budgets of some states, this month the independent California Legislative Analyst’s Office projected a deficit for next year of $1.9 billion — down from $25 billion at one point — and said California might post a $1 billion surplus in 2014, even accounting for the tendency of these projections to vary markedly from year to year.
A reason for the change, in addition to a series of deep budget cuts in recent years, was voter approval of Proposition 30, promoted by Gov. Jerry Brown to raise taxes temporarily to avoid up to $6 billion in education cuts.
President Barack Obama told U.S. governors attending a luncheon Monday that they are cutting too much funding for education and need to make reforms while continuing to invest in the future of America’s students.
While acknowledging the tough economic climate for state governments, Obama cited the need to prioritize the long-range significance of a strong education system.
“We’ve all faced some stark choices over the past several years, but that is no excuse to lose sight of what matters most, and the fact is that too many states are making cuts to education that I believe are simply too big,” Obama told a White House gathering with the National Governors Association that included some of his harshest Republican critics.
“Nothing more clearly signals what you value as a state than the decisions you make about where to invest,” Obama said, “Budgets are about choices, so today I’m calling on all of you: invest more in education, invest more in our children and in our future.”
The luncheon is an annual affair that highlights the constant tension over funding issues between the federal government and states. One table included Republican governors and constant Obama foes Chris Christie of New Jersey, Jan Brewer of Arizona, Bobby Jindal of Louisiana and Nikki Haley of South Carolina.
Obama noted the economic outlook is improving from the early days of his administration, saying, “our recovery is gaining speed.”
However, he warned that a failure to maintain significant government investment in education now would cause economic harm in the future by leaving U.S. workers unable to compete in a global marketplace.