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11-7-09

11-7-09. US economy sluggish recovery expected CA economy sluggish recovery also expected CA revenue picture no longer deteriorating several lean years ahead. Quarterly US real GDP growth, 2006-2009. % change, annual rate. GDP growth and job growth, 2006-2009. % change, annual rate.

daniel-mullen
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11-7-09

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  1. 11-7-09 • US economy • sluggish recovery expected • CA economy • sluggish recovery also expected • CA revenue picture • no longer deteriorating • several lean years ahead

  2. Quarterly US real GDP growth, 2006-2009 % change, annual rate

  3. GDP growth and job growth, 2006-2009 % change, annual rate real GDP jobs

  4. Annual US real GDP growth, 1976-2009 % change

  5. GDP growth and job growth, 1976-2009 % change real GDP jobs 1982-84: comparable?

  6. This isn’t 1983 • Federal Reserve can’t cut rates to stimulate economy • Bank sector is still a mess, reluctant to lend • Oversupply of residential and commercial real estate after bursting of bubble • Consumers overburdened with debt

  7. Annual US real GDP growth, 1976-2015 % change 1982-84 2009-11

  8. GDP growth and job growth, 1976-2015 % change 1983 1992 2002 2010

  9. Recent job growth: CA v US % change, annual rate US CA

  10. Annual job growth: CA v US % change CA US

  11. 2008-09 CA General Fund revenue $2.9b Corporate tax $9.8b Personal income tax $45.3b Personal income tax $45.3b Sales tax $24.6b

  12. CA total General Fund tax revenue and PITMay forecast including Aug changes $ billions total PIT

  13. CA General Fund PIT revenueMay forecast including Aug changes $ billions

  14. Capital gains, % of personal income

  15. How is 09-10 shaping up? • Jul-Oct: $22.7b, $1.4b below DOF forecast • DOF forecast does not include $3b of unspecified reductions so $1.4b is misleading • Withholding down 7%, wages and salaries probably not down that far

  16. Uncertainties • Will people withhold more? • Budget estimates $1.7b in 09-10 • Did people reduce withholding before Nov. 1? • Estimated payments • Old law: people were supposed to send half Apr/Jun, half Sep/Dec but sent 2/3 Sep/Dec • New law: 30% April, 40% June, 30% Dec but how will people actually respond?

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