Industry News
October 18, 2011
California Bankers Association and Beacon Economics Release California Banking and Economic Update
The California Bankers Association (CBA) and Beacon Economics have released the California “Banking and Economic Update,” a report that examines important issues that currently affect California’s banking industry and overall economy. The report is authored by Chris Thornberg, Ph.D., founding partner, and Jordan Levine, economist and director of economic research, of Beacon Economics.
Among the report’s findings is that California does not have an oversupply of housing units. In fact, California has the second-lowest vacancy rate in the nation, arguing against the commonly held notion that foreclosures are adding to and creating an excess supply of housing.
The report also explains the lack of price appreciation in view of the lack of oversupply. Because California homeowners have little or no equity there is little demand for “move-up” buying, and the only thing that can solve this is time.
Additionally the report offers a perspective on how California is performing economically. Thornberg and Levine note that there are clear indications that the state’s economy is on the mend. Since “hitting rock bottom” California has added back more than 226,000 jobs, although unemployment does remain “stubbornly high” in the state. However, in comparison to the U.S. overall, California is lagging behind the economic recovery. Most notably, U.S. GDP is nearly back to its peak levels reached before recession- a recovery of nearly 5 percent from trough levels- while California has added back 3.5 percent.
