California’s economy should grow about the same rate as the nation’s economy this year, or at about 3.25 percent, despite an expected slowdown in the housing market, said Dana Johnson, chief economist for Comerica Bank in a report released Jan. 5.
“The coming home price adjustments will be relatively orderly, denting, but not crushing the state economy,” said Johnson, who presented his report at an Economic Trends breakfast sponsored by Comerica Bank and the
San Diego Business Journal.
During the past five years, home prices in the state have increased at a 16 percent compound annual rate, but Johnson said the trend cannot last.
“House prices in California are going to slow dramatically or reverse,” he said. “Too many new houses are being built. Too many people are being priced out of the market, with incomes dramatically lagging house prices and short-term interest rates up sharply.”
Johnson noted that while California’s economy continues to grow, the per capita income of its residents isn’t rising as quickly as in prior years. In 1954, state residents enjoyed per capita incomes 25 percent above the national average; last year, the per capita income was only 6 percent better than the national average, ranking California 11th best among all states.
, Mike Allen