Summary:
Setting the stage for a day of discussion about California's challenges, the Milken Institute's Ross DeVol let the numbers tell the story.
The economic downturn hit California harder than the rest of the nation because of the state's exposure to the housing bubble and its dependence on international trade, which fell sharply. But California's recovery has begun, DeVol assured the audience.
• California's international trade — and thus its port activity — is picking up.
• In the housing market, the drop in prices has vastly improved affordability. Combined with low interest rates, this contributed to a 10 percent year-over-year increase in home sales the second quarter of 2010.
• Business spending on equipment and software has increased a dramatic 25 percent, which has had a significant effect on California high-tech and high-tech manufacturing sectors.
• California remains a magnet for venture capital investment, with 58 percent of all VC placements in the country.
Citing recent Milken Institute research, DeVol pointed to measures that policymakers could take to further improve the state and national economies: Make the R&D tax credit permanent and increase it by 25 percent, a move DeVol predicts Congress will make after the November elections. He also called for modernizing export controls on high-tech products — controls that President Obama has already loosened through an executive order.
Watch the video to hear DeVol's in-depth take on the economic indicators, the potential cost to taxpayers of underfunded public pensions and the loss of film production to other states. For a closer look at the indicators, visit the Data Bank at the Institute's Restoring California′s Promise website.
