Conference Presentation
Overview 2011 State of the State Conference
- Strategic economic development plans are being implemented through collaboration between the California Center Advisory Council, state leaders, and the Governor to guide the state out of the recession.
- The economy is projected to close the gap with the national average in recovery stages, driven by housing market recovery, international trade rebounds, and growth in information technology and social media sectors.
- Private sector job creation totaled 250,000 over the past 12 months, with professional and business services, including engineering and high-tech services, expected to drive continued recovery.
- Construction employment is anticipated to increase from the 300,000-job loss in late 2009, fueled by public investments in construction and highways.
- Business spending will sustain growth through productivity-enhancing IT equipment investments, despite a reduction from previous double-digit gains.
- San Jose and the Silicon Valley metro area are forecast to grow substantially faster than the national average, maintaining top-five status for job growth.
- Tech firms in Silicon Valley are expected to aggressively recruit computer software engineers and systems analysts globally due to persistent professional scarcity.
- Goods shipped to China rose over 30% in the past year, though the state remains exposed to potential Chinese slowdowns despite limiting sales to agricultural products in that region.
- Exports of IT equipment, aircraft, and aerospace products to Asia are projected to continue without slowdown, supporting thousands of jobs in manufacturing, transportation, and wholesale.
- Exports and imports are expected to show year-over-year gains of approximately 16%, excluding high-tech products shipped overseas via aircraft.
- Foreclosure rates are expected to decline to near the national average, but shadow inventory is not anticipated to be fully absorbed.
- The housing market is projected to stabilize by mid-2012, despite potential buyers remaining hesitant due to fears of further price declines.
- California will maintain leadership in technology-based development, with emerging strengths in nanotechnology, clean technology, green technology, and alternative energy expected to reach the marketplace soon.
- Silicon Valley accounted for 45% of national venture capital in 2010, with California collectively representing 57% of all venture capital placements.
- The state ranks fourth in technology and science indicators, though the gap with top-ranked Massachusetts has widened to nearly nine points.
- Human capital remains the weakest performance area at a 13th overall ranking, while technology concentration and dynamicism remain at very high rates.
- Policymakers are urged to implement five actions: making the R&D tax incentive permanent, reducing corporate income tax, resourcing the FDA and NIH, leveraging medical device strengths, and building human capital.
- California will remain the leader in retaining in-state bachelor's degree holders and maintaining the lowest out-migration rate for natives, while attracting skilled foreign-born talent over domestic students.
- The absolute number of foreign-born engineering degree holders in California is expected to exceed that of native-born Americans.
- While the U.S. and California are expected to lead in productivity growth, this may harm near-term job growth while enhancing long-term competitiveness.
- The state is projected to grow slightly faster than the U.K. and U.S. averages over the next few years.
- Unemployment rates consistent with 2006 or 2007 levels are not expected to return for many years, despite improvements.
- A primary downside risk involves potential ripple effects from the European sovereign debt and banking crisis on the financial sector.
- Innovation is described as requiring new thinking methods, with success linked to loving one's work to persevere through difficult periods.
- Foreign-born individuals are expected to fill domestic talent gaps, as the state remains less attractive for bringing in educated students from other U.S. regions compared to retaining skilled foreign-born talent.