New Wells Fargo report bullish on state economy

Aug. 22, 2012

By Joseph Perkins

A new report by Wells Fargo Securities Economics Group declares that “California’s economic recovery has gained considerable momentum over the past year.”

It cites the decline in the state’s jobless rate, increase in sales of existing single-family homes, growth in social networking and gains fueled by international trade as evidence, in the words of Herbert Hoover — the Stanford graduate, the nation’s Depression-era president — that “prosperity is just around the corner.”

“The progress made to date,” states the Wells Fargo report, “probably surprises many people who have been mesmerized by all the headlines surrounding municipal bankruptcies and the seemingly never-ending state budget battles, but California’s economy has made significant strides.”

Yet, for every silver lining Wells identifies, there is a corresponding dark cloud suggesting that the report’s authors, economists Mark Vitner and Sarah Watt, are decidedly more upbeat than the data warrant.

Indeed, while the state Employment Development Department reported last week that California posted three straight months of job growth between May and July, nearly 2 million California workers remain idle almost three years after the state’s economic recovery began, and the Golden State’s 10.7 percent unemployment rate remains the nation’s third-highest.

Meanwhile, the Wells Fargo report predicts that, even with recent job growth, California“will need another two and a half to three years simply to recover the jobs lost in the Great Recession.”

Distressed sales

Home sales were nearly 14 percent higher last month than in July 2011, according to the latest report from San Diego-based DataQuick. However, “distressed sales,” sales of foreclosed homes and “short” sales of homes facing foreclosure, accounted for 41 percent of the state’s resale market.

Social networking companies like Twitter, Pinterest, Yelp, AirbnB have moved into more spacious offices here in California to accommodate their expanded operations. Yet hanging over the still-maturing industry is the specter of Facebook’s post-IPO meltdown, which has seen its stock price plummet nearly 50 percent.

Indeed, warns the Wells Fargo report, “lingering questions about the long-term potential for social networking and interactive entertainment might set the state for a letdown along the lines of what was seen following the dot-com crash a decade ago.”

As to foreign trade, while California remains a net exporter, rather than importer, exports to many of the state’s major trade partners — including China, South Korea and the Eurozone — have declined on a year-over-year basis. That could be a harbinger of state trade deficits to come and a net outflow of trade-related revenues.

Finally, the Wells report seems to suggest that the public is unduly “mesmerized” by news reports of fiscal crises facing the state government as well as local governments.

Yet, the report’s authors, themselves, expressed concern that the state closed fiscal year 2012 with revenues falling $1.4 billion short of spendingl and that the current fiscal year, which began on July 1, got off to a disquieting start with revenues coming in 10 percent lower than Gov. Jerry Brown and the Democrat-controlled Legislature projected.

Vitner and Watt conclude their report stating, “We remain relatively optimistic about California’s near-term outlook.”  However, their sentiment is not shared by the overwhelming nine of 10 state residents, according to a recent Field Poll, who describe theCalifornia economy as being in bad times.

16 comments

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  1. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 22 August, 2012, 09:05

    The tea baggers HATE good econ news before the election— watch the comments below and see!!

    Ted

    Reply this comment
  2. Queeg
    Queeg 22 August, 2012, 09:45

    If you like wearing A ball cap and apron serving lentil soup and free range chicken sandwiches as well as multitasking by kissing the rings of globalists, there is growth.

    Queeg has no use for ripping off labor in the service economy…business models that dump social, health costs on government….then CWD whacko posters blame Democrats that inherit the globalists’ labor exploitation carnage.

    Queeg keeps you grounded!

    Reply this comment
  3. Queeg
    Queeg 22 August, 2012, 13:22

    The master/servant relationship is mutual respect of each other….not a master exploiting a slave and not a servant doing badly by his master.

    Globalism is modern slavery…. for a time it affords competetive advantage and unbridled economic growth, but it can lead to unintended actions like our American Civil War…..hmmmm….the middle east…..Greece!

    Reply this comment
  4. Donkey
    Donkey 22 August, 2012, 14:15

    [email protected]#5, I couldn’t agree more with your statement! Except the fact that you left out the greed of the RAGWUS my friend.

    Simple math makes clear the real problem. When 88% of all tax dollars goes towards the pay, perks, benefits, and pensions of the RAGWUS members the the over spending needs to come out of that 88%! Cut RAGWUS wages 30%, remove all perks, cut benefits 50%, and cut pensions to no more than $40,000 a year with no COLA’s, this will fix all the budget problems and bring the cost of government down. 🙂

    Reply this comment
  5. Donkey
    Donkey 22 August, 2012, 14:22

    [email protected]#2, the globalists you speak of were Bill Clinton, the man that gave the United States “NAFTA,” and “MFNTS” to China. All facilitated by that Berkeley creep, Robert Reich!

    The DemonRats were the implementers of the global sell off of the United States Queeg! 🙂

    Reply this comment
  6. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 22 August, 2012, 14:44

    Poor Duncey–

    The concept behind NAFTA — promoting economic growth by easing the movement of goods and services between the U.S., Mexico and Canada — had existed for years before it was born. President Ronald Reagan spoke of a North American agreement in his campaign in 1979, and the Canada-U.S. Free Trade Agreement had existed since 1989.

    Here to help– Teddy

    Reply this comment
  7. Queeg
    Queeg 22 August, 2012, 14:50

    There are no parties clean on slave labor. Do you really think 1,000,000 more young aliens with green cards and drivers licenses will pick lettuce and wash your PC Prius or Volt?

    They are going for your semi- skilled jobs and for the liberal arts types…they will dump you out of your cozy cubicles!

    Size up for your Far East made ball cap and apron…..you’ll beg for a slave labor service job stuffin organic bean burritos or hiding from daft DIY customers at big box hardware stores…

    Reply this comment
  8. Queeg
    Queeg 22 August, 2012, 16:08

    You know..if your 30-45…..it’s over for you….your an exploited labor casualty like in a Sinclair Lewis novel!

    Reply this comment
  9. Donkey
    Donkey 22 August, 2012, 17:22

    Ted Steals, Clinton and his buddy Robet Reich gave MFNTS to China in return for all the money China gave Bill for his election. I notice your history lesson passed right over that fact. 😉

    Reply this comment
  10. the Rt Rev Ted Steele
    the Rt Rev Ted Steele 22 August, 2012, 18:38

    poor duncey needs more history tutorials.

    Reply this comment
  11. Queeg
    Queeg 22 August, 2012, 19:36

    Donkey fiesty! Bob Dole….Dubai Ports lobbyist? Sell out our sovernity!

    Reply this comment
  12. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 23 August, 2012, 08:33

    Like the whack-job Texas tea bag judge who claims the President is going to sell our soveriegnty to the UN and start a civil war in December!

    weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

    Reply this comment
  13. Ulysses Uhaul
    Ulysses Uhaul 23 August, 2012, 09:17

    Desperate people +Desperate times=Deliverance Republicans

    -yep

    Reply this comment
  14. JLSeagull
    JLSeagull 23 August, 2012, 16:46

    Hey, what a really great title for this article! Except they misspelled the world “Bullsh*t”.

    Reply this comment
  15. Tax Target
    Tax Target 24 August, 2012, 07:10

    Queeg and Steele what are you worried about things are Bull_h__ for Kalifornsky. Then maybe you too can get hired at McDonalds once again. Aren’t you delighted?

    Reply this comment
  16. The Rt Rev Ted Steele
    The Rt Rev Ted Steele 25 August, 2012, 15:25

    HUH? Work is work— I’m good with it!

    Although—- I’m pretty good retired little buddy!

    Reply this comment

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