California good market for N.Z. this year

Press, 25 February 1981, Page 22

California good market for N.Z. this year

By

John N. Hutchison

ban rrancisco California should, be a good market for New Zealand through 1981 in spite of the drag of some aspects of its economy. Such is the prospect reflected in studies published recently by three large banks which have important interests in' foreign trade. The most sanguine of the analyses is that of United California Bank, which has established a notable reputation for the accuracy of its forecasts.

“California’s economy will post a notable performance in 1981 as the state’s hightechnology base continues to expand, and other industries recover from the recession of 1980,” the forecast said. “Real growth will not match the very rapid rates of 1976-78, but will continue to exceed that of the United States as a whole.” California’s foreign trade will continue to expand rapidly in 1981, the bank predicted, with imports ex-

pected to reach $37 billion,' a growth of 18 per cent. Exports were projected at $33 billion. Bank of America was more reserved, saying that there will be economic expansion in the state, but that real growth will be sluggish, and it estimated imports at $35 billion — a 15 per cent rise over last year. “Still,” said the bank’s forecast, “California will better the national averages in most economic categories.” California’s (international)

ide growth is largely a product of its advantageous location between two of the fastest growing regions of; the world, the western United States and the Pacific Basin, the forecast added. Some guidance to New Zealand exporters to the American west may lie in the three banks’ forecasts of California consumer behav« iour in 1981.

Total disposable income, U.C.B. believes, will advance 10.3 per cent because of gains in employment, wage increases, and significant

'earnings in interest. Furniture, recreational equipment, clothing and shoes are items predicted for good sales. Bank of America forecasts an increase of 2 per cent (after adjustment for inflation) in consumer spending in California, with some inc.r ases in purchases of home appliances and furnishings, and “products and services closest to consumers’ basic needs.”

Wells Fargo looks for consumer vigour to improve with the second quarter of 1981.

All three banks look for growth in employment, with estimates ranging from 175,000 to 250,000 new jobs, but no.e that it will not keep pace with the expansion of t! c labour force. Bank of America expects unemployment in California, now 7 per cqnt, to rise to 8 per cent. The causes include increased entry of_ women and youths in the job market, a growth in “two-wage-egrner” households, and the continued migration from other parts of the nation to California.