California must prepare for a recession

The U.S. and California economies are headed into a recession later this year, according to Chapman University's 2023 Economic Update Forecast, delivered June 23 by President Emeritus Jim Doti.

There are four factors causing Treasury bond is less than the the slump. Federal Funds rate.

First, despite strong jobs Also lurking in the background growth of 339,000 nationally are factors like the excess in May, it's slowing compared savings that Americans to a year ago. put away during the COVID

“It's going to continue slowing pandemic. According to Doti, the rest of the year,” he Americans had $3 trillion in said. One silver lining is that excess savings by the end of job growth is at least expected 2021. Those excess savings to continue, rather an go negative. have since dwindled to $1 trillion by last measure and are

Second, a key measure of expected to be spent by the money, M2, which basically third quarter of this year. is checking accounts, is dropping In sum, the economy will fast. dip into negative territory in

“The Federal Reserve played the third quarter this year, the white knight and came to with real GDP down as much the rescue,” during the COVID as 5% from the previous year, doldrums of 2020, he said. before heading back upward.

M2 zoomed up 15%, adjusted For California, Doti expects for inflation, from 202022. jobs growth to decline sharply But the past year, it has from 2022's robust 5.6% to dropped 9.5%. just 1.3% for 2023. But he also

Both the up and down warned of something new: spikes were something the Based on IRS data, those making United States hasn't seen in $200,000 or more are leaving generations. at such a high rate that adjusted

“We've had nothing like that gross income for the since World War II,” said Doti. state has dropped $20 billion

The record rise in the since 2018. money supply contributed to Higher-income Californians inflation peaking at 9.1% a are taking their money with year ago. them: $5.6 billion to Texas,

Inflation since has dropped $4.4 billion to Nevada and to 4% last month. $3.5 billion to Florida — all

The drop occurred as the with no state income tax, compared Fed has boosted interest rates to this state's top 13.3% from zero to 5.25% over the rate. past year. As the recession digs in,

That has crimped lending now is the time to reform the for homes, cars, etc., which state's tax system so it doesn't in turn contributed to a slowdown drive away its major producers in sales. and job creators. Now is

The third factor is declining the time for governments to housing starts. Whether show fiscal restraint and discipline or not homes are being constructed in negotiations with government can be a key measure unions. And now is of the health of the economy. the time for elected officials to

By the end of the year, the think long-term, not just until country will see 1.2 million the next election. starts, compared to 1.7 million in 2022, according to Doti.

For perspective, the 1.2 million housing starts is still more than double what it was at the nadir of the Great Recession over a decade ago.

Even so, a decline is a decline.

The fourth factor cited by

Doti is a technical change called a “negative interest rate spread,” meaning the 10-year

Adam Schiff

Assembly Constitutional Amendment 7

Re “Assemblyman's reckless smear of a colleague” (June 20):

Per Google, Jackson has a Ph.D. in social work from California Baptist University. Apparently he didn't focus on the biblical admonition in Leviticus to love thy neighbor as thyself and Jesus' having upped the ante telling us to love our enemies. I've learned that “White supremacist” has overtaken Uncle Tom as a pejorative, which is rather comical. Jackson is pitiful in this fight; Essayli demonstrates

America's outdated gun laws needs reform

Re “Newsom calls for national gun control” (June 13):

Newsom should be heartily commended by all Americans for trying to save lives, in the face of NRA and right-wing conservatives failing to do

The third factor is declining housing starts. Whether or not homes are being constructed can be a key measure of the health of the economy.