The golden state’s glowing prospects

Press, 2 November 1981, Page 22

The golden state’s glowing prospects

By

JOHN HUTCHISON

in San Francisco

In spite of some present slowdowns in important business sectors, California promises to provide an increasing market for New Zealand products in the decade of the eighties. By 1990, its population will be nearly 28 million, according to one educated estimate — an increase in ten years of more than four million. The Centre for Continuing Study, of the California Economy (C.C.S.C.E.) in Palo Alto near San Francisco, says that 2.5 million new jobs will be created in that period, with each major economic sector growing faster than in the nation as a whole. Greatest exxpansion is due in the group between 34 and 44 years of age. A decline is expected in the 16-to-34-year age group. Another forecast, by the national Kiplinger organisation in Washington, D.C., agrees that there will be an upsurge in California’s prosperity, and it picks the 20-to-44-year age group as the most influential in consumer purchasing. This segment, representing 35 per cent of the population by 1990, will spend heavily for homes, home furnishings, clothing and recreation, the Kiplinger California Letter predicts. New industries will generate employment and consumer markets; agricultural exports will rise to meet world food demands, and tourism will leave increasing funds in California as the state’s year-round recreation resources continue to develop. California’s increasing share of the nation’s manufacturing, which rose from 5.6 per cent to 6.8 per cent during the last decade, will move up to 7.9 per cent in this one, the forecasters said. High technology leads the field, but the state is strong in manufacture of apparel, furniture, chemicals, plastics, machinery and publishing. ■ “All this purchasing power by Californians and visitors to California suggests that New Zealand traders who read the trends accurately can find markets,” said an analyst here. “The simple population arithmetic itself is compelling — the state's increase will surpass the entire population of New Zealand less than nine years from now:” The fastest growing area, according to the C.C.S.C.E. study, will be San Diego, with high technology development the major factor. Sacramento will be next in rate of growth. For the San Francisco area, the centre predicts the state’s highest per capita and family incomes, as well as the most new housing construction. Its population will grow from 5.2 million now to 6.1 million in 1990. Although housing in the San Francisco area now suffers from the most critical shortage in the. nation, and is possibly the most expensive, the centre’s economists were optimistic that high mortgage rates will decline, to rSlax the principal cause of the slow

home-building pace. The housing slowdown has created in turn a sharp depression in the timber industry, particularly on the American West Coast. The forecast looked past some other presumably shortterm problems now troubling business in California. The semiconductor industry has slowed. Aerospace, defence production and aircraft manufacture have declined, although are thought to be stabilising. Automobile sales are sharply down. Several major banks, including the giant Bank of America and Crocker Bank,

both with headquarters in San Francisco, are reporting sharp drops in profits for the quarter ending in September. But these are regarded by the forecasters as dips, not trends. The Californian economy has “an underlying strength and resiliency that should carry it through the 1980 s in remarkably good shape,’’the study said. The Kiplinger organisation predicted, “the long-range trend will definitely be up,” although it cautioned that the rise through the decade will have pauses. .