CALIFORNIAN ECONOMY Growth predicted despite crises

Press, Volume CXIII, Issue 33417, 26 December 1973, Page 12

CALIFORNIAN ECONOMY Growth predicted despite crises

(By

JOHN N. HUTCHISON)

SAN FRANCISCO. In spite of inflation and the energy crisis plaguing the United States, Californian economists are predicting moderate 1974 growth in this, the most populous state. Paradoxically, one of the factors blamed for contributing substantially to the country’s economic troubles — the export of so much American food and feed to a world beset elsewhere by crop failures — is bolstering California’s income.

Food production is the state’s main industry. It produces more fruit, vegetables, fish and chickens than any of the other 49 states; its cattle, cotton, rice and potato crops are among the largest. One banker economist predicts a dramatic increase in cash-farm receipts in California next year ■— a rise of more than 13 per cent to a record level of SNZ4B67 million. He also estimates that the Californian economy will provide 155,000 new jobs next year and that median family income will increase by about SNZ6SO.

“An equally acceptable expert forecasts 180,000 new jobs, but believes that the number seeking work will ceed that, wiping out gains.

EMPLOYEES LAID OFF

The predictions were made about the time two large industries took sudden nationwide action to lay off employees. Several thousand Californians were affected — either discharged or sent home temporarily by auto plants and airlines.

' The energy crisis is comipeting with the Watergate scandal for public attention in California, as elsewhere in the States, and tsilarly, generating deep dis-, satisfactions with the Nixon Administration. The nation: is being rudely joggled out! of its normal assumption; that “there is more where; that came from” — a pre-i viously familiar American phrase — and from con-: sumers and large segments! of business there is both bitterness and mystification that Washington is tardy and disorganised in acting. Northern Californians were told last week that their average household gas and electric bills would go up 30c a month to pay for the utility company's ml creased fuel costs, which 'would seem a modest rise; ibut for two previous increases this year. ' Ordinary gasoline jumped (overnight by six per cent to I the equivalent of N.Z.42C an !imperial gallon. . ’ ( Clothing costs are rising. .

Groceries fell slightly in price from the record peaks of last Northern summer and are not expected to advance much in 1974. Averaging the forecasts of numerous reputable Californian economists produces an estimated 1974 consumer price index rise between six and eight per cent, to eat up most, if notall, of that expected $650 additional family income. There are a few fearful prognoses of a recession even in this prosperous state as the experts scramble to reappraise the shifting economic scene from one week to the next. But California has relatively little heavy industry to drain its energj' sources. It has rather a mild climate, requiring less winter heating than most of the country. It ranks third among the states in oil production and generates large quantities of hydro-electric and nuclear power.

It is generally agreed that there will be shortages of energj', but probably hot approaching the severity with which they will affect the Uited States in general. A slowing of the growth rate, but probably no recession. That seems to be the consensus for the coming year in California.