Golden bear? California's surprising economy.

• Author: Welch, Matt
• Position: Citings

IF THERE'S ONE thing the 135 candidates for California governor could agree on before the October 7 recall election, it was that the state economy is a shambles, thanks to Gov. Gray Davis.

"Of course, the first thing he did in office is enact that massive tax increase that broke the back of California's economy," tax-cutting Republican candidate Torn McClintock said on the Roger Hedgecock radio show in late August.

But has the Golden Spine truly snapped? Several recent studies, academic and journalistic, suggest not, though there are storm clouds on the horizon.

Senior Economist To Lieser of UCLA's respected Andersen Forecast predicted in a June report that the state's recession likely would end by the third quarter, "because it is time for it to end." As Lieser and others point out, the great sucking sound in California's economy (and state budget) is coming from just one Silicon Valley hole, where the dot-com collapse has vaporized 250,000 higher-end Bay Area jobs. "The overall forecast for Los Angeles County and Southern California remains positive," an Andersen press release stated.

In fact, argues Palo Alto's Center for Continuing Study of the California Economy, outside the burst bubble the state has outperformed the rest of the country. "The California regions outside the Bay Area actually added jobs between January 2001 and January 2003" the center reported in March.

Though the employment outlook is positive, the wealth wipeout was all too real. The California Department of Finance reports that...