California's continuing economic recovery

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California's economy remains convalescent, despite the slowed growth that came in 2013 from Federal policy changes, the sequester and the government shutdown. In a Regional Intelligence Report for Beacon Economics, Chris Thornberg wrote structural issues in the U.S. economy - like the deficit and programs such as Social Security and Medicare - need attention, but are not immediate threats to the state's economic growth. California relies on consumer spending and tourism, as well as the defense industry, which are not impacted unduly by these costs.

The report pointed out that California has regained more than 825,000 of the 1.368 million jobs the state lost to the downturn, and economic improvement is expected to continue. Beacon Economics expects job growth to be in the 2-2.5 percent range through 2014 and level off near 3 percent for 2014. 

Other facts
Real estate is also expected to thrive in the year ahead. Home price appreciation, already high, will likely remain in the double digits throughout much of 2014, driven by tight housing inventories and rising consumer income.

Beacon Economics predicts California's population will continue its current increase, but at a rate of less than 1 percent a year. This will help increase the state's consumer spending as well as its tax revenues for local governments.

"It is still not the time to pop champagne corks and toast to California's full recovery," Thornberg wrote. "But, the Golden State has made significant progress over the past three years in repairing the damage done by the Great Recession."

As such, Thornberg writes that feelings of optimism are called for regarding California's economy overall. This presents opportunities to businesses in the year ahead, as a recovering economy means more consumers should will have more disposable income to spend.

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