California revenues top expectations by nearly $2 billion
California state tax revenues for November came in $1.7 billion ahead of projections, more than making up for an October dip.
Revenues for the first five months of the fiscal year are running $1.9 billion above the $43.6 billion forecast in the 2018-19 Budget Act. The budget act anticipated revenues of $7.7 billion for November, but receipts came in at $9.4 billion for the month.
“As noted last month, processing delays pushed many receipts that would have been recorded in October into November, which contributed to the month’s higher-than-forecast total,” said H.D. Palmer, a Department of Finance spokesman.
The biggest surge in revenues came from personal income tax revenues that came in $1.69 billion above forecast for the first five months of the fiscal year, according to the DOF report. Sales and use tax receipts came in $6 million below forecast for the same period and corporation tax revenues were $87 million above forecast.
The UCLA Anderson Forecast’s December report indicated that the state and federal economies are headed for a slowdown, partially a result of federal fiscal policies.
The national gross domestic product will downshift to 2% in 2019 from its current 3% level, dropping further to 1% in 2020, according to the UCLA Anderson Forecast economists.
Given that the nation and California are experiencing full employment, 3% quarterly growth is not sustainable in coming years, according to the economists.
While the state’s economy has been evolving as expected, the risk of a trade war with China remains a concern, as it could adversely affect the logistics industry, one of the fastest growing sectors in California this past year, said Jerry Nicklesburg, director of the Anderson Forecast.
Nickelsburg expects California’s average unemployment rate to have its normal differential to the U.S. rate, at 4.6% in 2020. Total employment is expected to grow in the mid-1% range in 2019 and slow to less than 1% in 2020. Real personal income growth is forecast to be in the upper 3% range in 2019 and will cool to just below 3% in 2020. Homebuilding will accelerate to about 140,000 units annually by the end of the forecast horizon in 2020.
California's real GDP rose by 3.3% in the second quarter of 2018, according to the Department of Finance, and the unemployment rate held at is historic low of 4.1% in October for the second month.
Although September job gains were revised down to 10,500 from 13,200, California added 36,400 nonfarm jobs in October bringing the year-to-date average job gain to 23,400 per month, the DOF said.
California’s median home price dropped 1% in October to $573,000 from September, but remained up 4.9% compared to October 2017. The median home price is 5% below the high of $602,760 recorded in June.