Region's Economic Outlook

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Speed Bumps Ahead
Some local economists concede soft spots in the area’s ? nancial landscape but say these are more like speed bumps than large potholes.
     “Cautious” is the position of Dennis Meyers, principal economist at the California Department of Finance. He believes growth rates for the region’s key economic elements are likely to be somewhat more moderate than last year, “but I de?nitely don’t believe there’s any strong downturn in the of?ng,” he says.
     Generally, he expects slowing in growth nationally this year, which will “spill over to California, although we look for somewhat better job growth and for income growth in the state to show a slight increase versus 2005.
     “Two areas of concern that might be important for Sacramento are the ef-fects of the cooling off of the housing market and what that will mean for the region,” Meyers says. “We don’t expect to see signi? cant declines, but we’re not going to see the kind of gains the local market had been making.”
     The end of 2005 was “sort of the morning after, given the hurricanes and their impact on the national economy. Those hurricanes and the subsequent spike in energy prices are classic examples of what we refer to in macro economic classes as ‘supply shock,’” he says.
     Characteristics of supply shock are a fall in real output and a rise in the national price level, aka, in?ation. The third and ? nal quarters of the year just ended saw a spike in the con-sumer price index, with economists anticipating a slowdown in gross domestic product growth for the fourth quarter.

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