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California Legislative Analyst offers summary of current economic conditions

Our California Economy & Taxes blog provides the latest data on California’s economy and taxes, plus commentary on important trends and research. Below is a recap of our posts over the last month.

Tax Collections Preliminary total collections for June were $350 million above the administration’s May estimates. Total collections for 2018-19 were $647 million above the administration’s May estimates.

State Fiscal Health Index The chances of a downturn appear to be increasing, but it is too soon to draw firm conclusions.

Jobs Statewide nonfarm employment grew by an estimated 46,200 in June, above the average pace of the past 12 months.

Unemployment Claims After a long period of decline, unemployment claims in California have held at steady but low levels for the past year. June claims were consistent with the pattern.

Home Building Permits Home building in California continues to weaken. Less than half the number of multifamily permits were issued this June compared to a year ago.

Home Sales June data show home sales remain weak in California.

Film Tax Credit Update First film tax credit has cost about $500 million to date, cost of second program unclear.

Graph of State Fiscal Health Index, June 2019

Graph of California State Fiscal Health Index, June 2019. Graphic courtesy of Legislative Analyst's Office.
Graph of California State Fiscal Health Index, June 2019. Graphic courtesy of Legislative Analyst’s Office.

We created the State Fiscal Health Index to track the strength of economic conditions relevant to the state’s fiscal health. The index ranges from 0 (representing the lowest level in the last 25 years) to 100 (representing the highest level in the last 25 years). Both the level of the index and changes in the index from month to month offer information about the state’s fiscal health. When the index is high, revenues tend to be high compared to historical norms. Similarly, when the index is increasing, state revenues are likely to increase over the next six to twelve months. On the flipside, a consistent decline in the index over a few months has typically signaled that the state is entering an extended period of revenue weakness.

…Although the index remains high, it has declined for three straight months. Declines of this magnitude have not been observed since the last recession. Weakness appears most pronounced in housing.

The article above was released by the non-partisan California Legislative Analyst’s Office.