The Economy of California   Term Paper ID:27801 Click to get this paper

Essay Subject: The nation began recovering from the recession, but California's economy seemed to respond less quickly. There are two likely reasons for this: California's economy is the largest in the nation; & the decline in aerospace spending.... More...

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Paper Abstract: The nation began recovering from the recession, but California's economy seemed to respond less quickly. There are two likely reasons for this: California's economy is the largest in the nation; & the decline in aerospace spending. Paper Introduction: The relationship between the economy of the nation as a whole and the economy of any given state is not always clear. The U.S. economy has recently been recuperating from a period of decline and turmoil; there is much concern over whether the recovery is to be long-lasting and whether it is taking place too rapidly or rapidly enough. California is the largest economy within the United States, and indeed the California economy rivals that of many nations of the world. The decline in government spending for the aerospace industry in particular has profoundly affected the economy of California, and the recovery that is taking place elsewhere in the nation seems to be sluggish in California. How will the anticipated economic growth on the national level affect California? Sivy (1994) believes that California will benefit from the impro Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. House delegation that is equal to the combined delegations ofNew York and Pennsylvania and accounts for 12 percent of the entire Housemembership. News & World Report (September 14, 1992), 69-71.Sivy, Michael. California is the largesteconomy within the United States, and indeed the California economy rivalsthat of many nations of the world. How will the anticipated economicgrowth on the national level affect California? The state's bond rating dropped fromone of the highest in the country to one of the lowest. Among these problems are thenational recession, swelling immigration and its heavy demands on stateagencies, defense and aerospace downsizing, a prolonged drought's lingeringimpact on the agriculture industry, scheduled military base closings, andvast construction cutbacks. In the pastfour years, some 43, of California's older corporations disappeared. The state has beenbattered by a relentless recession that has cost the state at least 7 , jobs since May 199 , many in the defense industry. California's predominantlywhite middle class is bitter about the way the economy is developing, withgated communities and armed guards for the professional few, and meansuburban housing with miserable commuting conditions or crime-ridden cityslums for the rest. He notes that the recession hasbeen quite painful in California, and especially in Southern California,but he further notes that after four years, the state is beginning torevive so that the economy looks better than at any time since 199 .Because of this, companies that get a large share of their profits fromCalifornia could see substantial earnings and share-price gains over thenext two or three years. California has been losing companies to other states in recent yearsas these companies seek better tax structures or lower costs, and the lossof these tax-paying and job-providing companies in the state has added toCalifornia's already formidable problems. It ended with the demise of the Reagan-Bush era. (Demott, 1993, 17)Business disenchantment with taxes and regulation is not uniqueto California, but the vision of California up against such seriousproblems represents a tremendous change in its image. This has also meant a loss of faith inthe future, and for the first time in 2 years, more licensed drivers leftthe state than moved in last year. In addition, only3 percent of all Californians rate their state as one of the best placesto live, down from 73 percent 25 years ago. Hylton (1993) sums up the issue by indicating the belief that thenation is perhaps more dependent on the recovery of California thanCalifornia is on the recovery of the nation, or at least that each isdependent on the other in some degree. "California's Economic Crisis." Nation's Business (July 1993), 16-22.Hylton, Richard D. Nearly halfthe total loss has been in Los Angeles alone, where the unemployment rateis 11.2 percent and climbing, and the problems for the state as a wholewill get worse before they get better: That's bad news for the entire nation because California accounts for about one-seventh of the country's industrial production and of its gross domestic product. The decline in government spending forthe aerospace industry in particular has profoundly affected the economy ofCalifornia, and the recovery that is taking place elsewhere in the nationseems to be sluggish in California. During this sameperiod, nonresidential construction plunged 44 percent, and businessfailures soared by 43 percent in the first half of 1992. The U.S. This does not mean that all Californians arehappy with these changes, for many are not. (Hylton, 1993, 71) References"California Mark IV." The Economist (June 4, 1993), A23-24.DeMott, John S. In 1992, the state faced a 63-day crisis without a balanced budget until Republican Governor Pete Wilsonand the legislature finally agreed on one. This is no longer the case. The south is facing the greater problem, for it hasroughly 6 percent of the state's jobs and income; therefore it accountsfor nearly 75 percent of the job loss over the past two years. The people arepessimistic about the future, and a number of business and professionalorganizations have been suggesting ways to overcome this and to increasethe growth potential for the state. The shuttered hangars of the military bases and defense plants that litter southern California are its final epitaph. If LosAngeles county is excluded, it seems that the rest of the state has had aremarkably mild recession, with the fall in non-farm jobs amounting to only1.2 percent between mid-199 and late 1993, compared with New York and NewJersey, which both lost 7 percent of their non-farm jobs over the sameperiod, or Massachusetts, which lost 11.5 percent ("California Mark IV,"1994, 23). economy hasrecently been recuperating from a period of decline and turmoil; there ismuch concern over whether the recovery is to be long-lasting and whether itis taking place too rapidly or rapidly enough. California has long been accustomedto growing its way out ofproblems and legislating its way out of the problems of growth, but todaythis kind of legislation is stunting the economy. The relationship between the economy of the nation as a whole and theeconomy of any given state is not always clear. "It Will Get Worse in California." Fortune (April 19, 1993), 7 -75.Roberts, Steven V. Sluggishness in its biggest state is bound to be a drag on America's economy. Generally, the way California goes isconsidered an indicator for the rest of the country: Because of California's size, political clout, and tradition as a national trendsetter, the impact of what business generally views as excessive taxation and regulation on companies is being watched closely by businesses and governments in other states for the lessons that the current situation in California offers to other parts of the country. California's role as a trendsetterextends from fashions and fadsto such significant initiatives as the tax revolution of theearly 197 s, and the state had been viewed as a land of economic promisefrom the Gold Rush through the emergence of Silicon Valley as the motherlode of American technology. California's roleas leader is in part a function if its population size. Los Angeles county alone, which is home to six of the biggestdefense contractors in America, accounted for three out of four of therecent jobs lost in California. California has passed through the gold rush, the oil era, and adefense boom. The state has a 52-member U.S. Intheir place have come 33, sprightlier firms that have been expandingthroughout the recession by a healthy 2 percent or more a year, and thereare more such companies in California than anywhere else in the nation.Once again, it seems that California is showing the rest of the nation theway to the next century. However, improvement in two companies does not mean a majorimprovement for the state as a whole, though each company will be dependenton improvements in some other sector, such as improved home sales forWestcorp. Another company cited is Westcorp, adiversified financial services company with assets of $2.7 billion whichwill cash in on renewed car sales--the company gets about two-thirds of itsprofits from financing automobiles. Today California faces fiscal problems thatare putting additional tax pressures on businesses, which have also beenforced to cope with regulations that go further than those of many otherstates (Demott, 1993, 17-18). Sivy (1994) believes that California will benefit from the improvednational economic picture, especially if stock buyers listen to hisforecast and purchase stock in that state. The state still has a great potential.Its role as gateway to the Pacific Rim stands to grow well into the nextcentury, and it remains a world leader in high-tech research, development,and manufacturing. "California Crumbling." U.S. The state hasalso been battered by fire, flood, earthquake, and riots since 199 ,reducing confidence in the state. It is now placing its hope on knowledge-intensive employmentas new businesses are springing up everywhere in telecommunications,entertainment, medical equipment, and international trade. Westcorp also has 26 savings-and-loanbranches that would benefit from an improvement in housing sales and homeimprovement (Sivy, 1994, 154). California has 54 electoral votes, and this is 2 percent ofthe total needed to elect a president. According to Wall Street analysts, a companylike Times Mirror should benefit greatly as the Los Angeles Times benefitsfrom a new growth in advertising. The price for this was high--$5.7 billion in spending cuts, which would remain only a temporary solution(Roberts, 1992, 69). But for America in general--and California in particular--the Anglo- Saxon century is over. The fact is that California faces a major change in viewpoint inrelation to the rest of the country because of the current problems.California has long been seen as the ultimate American frontier, a place ofboundless energy and optimism, a magnet for the most irrepressibleimmigrants escaping the cramped quarters of the East and the dusty povertyof the Middle West. "Prospects Are Golden for the U.S.--and the Golden State Too." Money (August 1994), 154. The newspaper's strongest and mostprofitable ad category is classifieds, and these are expected to rebound.The Times also recently agreed to sell its 1.2 million subscriber cable-television system to Cox Cable for $2.3 billion, which should furtherbenefit the parent company's growth. ("California Mark IV," 1994, 23)The conventional view is that defense cuts have devastatedCalifornia, but this is incorrect because the impact has been highlylocalized. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.