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Monthly Jobs Report March 26, 2024

California businesses lost 3,400 jobs in February, and the January figure was revised downward by 32,500. The state's unemployment rate continued to climb and now stands at 5.3 percent. With February's increase, more than 1 million Californians are now unemployed. The "Sahm rule," a real-time recession indicator that first triggered a year ago, continues to signal an economic downturn. 


U.S. Retail Sales Update: February 2024 March 14, 2024

U.S. retail sales have dropped 0.4 percent over the last 3 months and grown 1.5 percent over the last 12 months. The 12-month growth rate was below the rate of inflation. 


Annual Revision Shows State Added Few Jobs Last Year March 13, 2024

Each year, the U.S. Bureau of Labor Statistics revises the state's jobs number to match actual payroll records from businesses. The latest revision lowered its count of California jobs by 1.5 percent. The corrected data show that the state added just 50,000 jobs between September 2022 and September 2023, while preliminary monthly reports had showed the labor market growing by more than 300,000 jobs. 


Inflation Tracker March 12, 2024

Short-term core inflation, as measured by an annualized 3 month average, has been rising over the last several months. The most recent February data shows short-term core inflation running at a 4 percent annual rate. 


Updated "Big Three" Revenue Outlook March 8, 2024

Latest Forecast Unchanged From Last Month, Continues to Suggest Downside Risk. February's tax collections and economic data did not materially change our outlook, with our latest forecast being basically unchanged from last month. Our  forecast continues to suggest there is significant downside risk to state revenues relative to the Governor’s Budget. Specifically, our forecast is about $25 billion below the Governor’s Budget across 2022-23 to 2024-25. That being said, there is still significant uncertainty about how much revenue the state ultimately will collect. It is entirely possible that revenues could end up $10 billion higher or lower than our estimate for 2023-24 and $25 billion higher or lower for 2024-25.


Income Tax Withholding Tracker March 4, 2024

February PIT withholding came in $1.2 billion (16 percent) above projections included in the 2024-25 Governor's Budget. Several one-time factors make interpreting the month-to-month change difficult, including a $600 million collection on leap day and an added $500 million from stock equity compensation withholding at several technology companies. An apples-to-apples comparison to the same period last year, which should help account for leap day, suggests underlying withholding growth of about 3 percent above 2023. 


The 2024-25 Budget: Property Tax Postponement Program February 29, 2024

The Governor proposes to use $7.5 million General Fund on a one-time basis to support the Property Tax Postponement (PTP) program. The PTP program has a structural deficit, very low participation, and relatively high administrative costs. We recommend the Legislature (1) direct the State Controller's Office to report at budget hearings to provide an update on the PTP program and (2) consider eliminating the program. 


Overview of State Bond Debt Service February 27, 2024

We summarize state bonds, the state's current debt levels, and its annual debt service payments. In inflation-adjusted terms, total bond debt and annual debt service payments have declined over the last couple of decades. The share of the overall state General Fund budget going to debt service payments is less than 3 percent--also the lowest level in over 20 years. We project that the share of the General Fund budget going to debt service payments will remain relatively steady over the next few years. 


Cannabis Tax Revenue Update: February 2024 February 27, 2024

Our new forecast for 2023-24 cannabis retail excise tax revenue is $675 million, very close to the January Governor’s Budget forecast of $660 million.


Evaluating Tax Policy Changes in the Governor's Budget February 22, 2024

The Governor’s budget includes several proposed tax policy changes. We recommend approving proposals to eliminate certain tax expenditures for fossil fuel companies and conform to federal law on tax deductions for open space and historical preservation. We also suggest, in light of the state’s fiscal situation, seriously considering the proposal to eliminate lenders’ ability to claim tax deductions or refunds for sales tax payments made with bad debt. Finally, we recommend rejecting the proposal to limit the use of net operating loss deductions. 


U.S. Retail Sales Update: January 2024 February 15, 2024

U.S. retail sales have dropped 0.5 percent over the last 3 months and grown 0.6 percent over the last 12 months.  The 12-month growth rate was well below the rate of inflation. 


California Housing Affordability Tracker (January 2024) January 24, 2024

Over the last few years, we have seen a rapid increase in California housing costs, led by the dramatic increase in the costs of purchasing a home. Monthly costs for a newly purchased home are about $2,500 higher than they were just a few years ago. Annual income needed to qualify for a typical home is over $220,000—roughly 2.5 times higher than median household income (about $85,000). Further, the annual income needed to qualify for a more affordable "bottom-tier" home is 60 percent higher than the median income. 


Recent Revenues Coming in Below Governor's Budget Projections January 22, 2024

In the first few weeks of January, real-time personal income tax (PIT) revenue collections are running $3 billion to $4 billion short of the January target for current year revenue projections included in the 2024-25 Governor's Budget.


U.S. Retail Sales Update: December 2023 January 17, 2024

U.S. retail sales have grown 0.7 percent over the last 3 months and 5.6 percent over the last 12 months. Both of these growth rates outpaced inflation. 


Updated Unemployment Insurance Fund Forecast Shows Structural Deficit January 16, 2024

The administration's most recent Unemployment Insurance (UI) Trust Fund forecast shows that UI benefit payments will exceed state payroll tax receipts by $1.7 billion in 2024, after surpassing receipts by $1.3 billion in 2023. As a result, the state's outstanding UI loan from the federal government is set to increase over the next two years, despite automatic employer payroll tax increases to repay the loan.