California's Economy Surpasses UK's

[Conker]

Housing values are irrelevant to GDP. Initial construction costs, however, do play into the equation. Also, wouldn’t exchange rates be normalized in comparing the two GDPs, making dollar strength irrelevant also (but I have always been confused about exchange rates)? The posts here have me thinking about the issue of government debt. In comparing UK to CA, it would be interesting to compare government debt as percent of GDP. Anyone have that comparison off top of their head?

UK public debt is around 81% of gdp. so probably pretty similar to CA i believe

[mphgrove]

UK public debt is around 81% of gdp. so probably pretty similar to CA i believe

Here is some data that is two years old on CA (and all states in US’ debt to GDP). CA is at 15% of GDP right in line with other states. But, in comparing that to the 81% UK figure you cite above, you would need to factor in CA’s appropriate share of overall USA public debt. Who knows what statistic you’d end up with after doing that? None of this to deny that CA has some serious fiscal problems. But those problems  may be more in line with the level of problems other states are facing, which is way different from when you listen to the rantings of the Laura Ingrahams, Shaun Hannitys and Tucker Carlsons and their ilk on Fox News, who try to make it sound like Californians are out in left field living in a different world.

https://www.usgovernmentdebt.us/state_debt_rank

[mphgrove]

To give some support to the other side of the argument on CA, within the US lots more people are MOVING OUT of California than are MOVING IN (any moving van company will back this fact up). To a certain extent, this is offset by immigration from outside the US which has its good and bad sides for economic growth. Moving toward a more merit based immigration approach, as Trump proposes, would help with this immigration aspect. But I agree that CA will go downhill over the long term if way more people keep moving out than move in.

[Conker]

Here is some data that is two years old on CA (and all states in US’ debt to GDP). CA is at 15% of GDP right in line with other states. But, in comparing that to the 81% UK figure you cite above, you would need to factor in CA’s appropriate share of overall USA public debt. Who knows what statistic you’d end up with after doing that? None of this to deny that CA has some serious fiscal problems. But those problems  may be more in line with the level of problems other states are facing, which is way different from when you listen to the rantings of the Laura Ingrahams, Shaun Hannitys and Tucker Carlsons and their ilk on Fox News, who try to make it sound like Californians are out in left field living in a different world.

https://www.usgovernmentdebt.us/state_debt_rank

i was going on the figure of CA debt being $2 trillion quoted earlier in the thread. i think US total federal debt is somehwere around 80% of gdp. so would imagine it would be pretty close to that when you factor in CA's share of that.

[mphgrove]

i was going on the figure of CA debt being $2 trillion quoted earlier in the thread. i think US total federal debt is somehwere around 80% of gdp. so would imagine it would be pretty close to that when you factor in CA's share of that.

Unfortunately US debt has crept above 100% recently and our Republican regime is being just as fiscally reckless as the Democrats with tax reduction coupled with no spending reduction. Based on this discussion, it is looking like CA debt ratio may exceed UK’s (but no worse than the other US states) but we need a economist/satistician to corroborate. Of course, we spend a lot more on world defense than does UK I think.

[denarii]

Here is some data that is two years old on CA (and all states in US’ debt to GDP). CA is at 15% of GDP right in line with other states. But, in comparing that to the 81% UK figure you cite above, you would need to factor in CA’s appropriate share of overall USA public debt. Who knows what statistic you’d end up with after doing that? None of this to deny that CA has some serious fiscal problems. But those problems  may be more in line with the level of problems other states are facing, which is way different from when you listen to the rantings of the Laura Ingrahams, Shaun Hannitys and Tucker Carlsons and their ilk on Fox News, who try to make it sound like Californians are out in left field living in a different world.

https://www.usgovernmentdebt.us/state_debt_rank

As US states cant avail themselves of bankruptcy their General Obligation constitutional debt interest and principal payments are capped at 15% of tax revenue.

However they can borrow 'unsecured' appropriation debt and they have unfunded liabilities that can grow. If you look below California's unfunded liabilities are about 3x the debt:

http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind4

Put simply if you live in California and earn $200k in personal income, your share of the state liabilities in 2013 was ~$60k and presumably its grown in the last 5 years. $200k pretax is not exactly a lot in LA or SF and from that you have to deduct taxes, cost of living, mortgage, retirement savings, child costs, then add on state and federal debt and deficits....

And they have one of the worst fiscal gaps in the US despite being a 'big winner' in this economic cycle...

http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind9

Revenue is consistently below spending.

An explosion of underfunding of liabilities is what will probably drive the state finances crisis in a few years time, but as I said, states cant default on constitutional bonds but can default or renegotiate other liabilities including pensions and appropriation debt. Cities can default on GO bonds but often cant default on appropriation bonds like sales tax bonds. Puerto Rico as neither a state nor city has defaulted on everything and has cut taxes for US immigration to almost zero as a way to attract entrepreneurs.

[mphgrove]

Above charts say it looks like we think we can just keep spending away and it will never catch up with us. Good thing the Chinese like to lend money. But their bubbles will catch up with them some day too.

[oldtimer1]

One thing for sure. The US took in a record 515 Billion dollars in taxes for April 2018. The Federal government spent under 300 billion for the month.  The US is actually taking in more money after the tax cuts. Looks like American economy is soaring under Trump. No, Obama can't take credit for this. 

[HonestBob]

CA is a fantastic place to live so long as you have money to insulate yourself from the crap.

They can get away with their crazy tax policies because people love to come here, I've lived all over the world and this is the nicest place by far because you've got all this natural beauty, weather, and a world class city (LA - SF is a shithole).

However, sane people are also leaving in their droves because of the insane politics. I have kids and don't want them turned into the giant pussies that the education system is set up for here.

[mphgrove]

One thing for sure. The US took in a record 515 Billion dollars in taxes for April 2018. The Federal government spent under 300 billion for the month.  The US is actually taking in more money after the tax cuts. Looks like American economy is soaring under Trump. No, Obama can't take credit for this. 

Really? Even though I am not a Trump fan, I badly want to believe you. But it seems weird that we would have turned such a huge corner in just a month or two???

[mphgrove]

CA is a fantastic place to live so long as you have money to insulate yourself from the crap.

They can get away with their crazy tax policies because people love to come here, I've lived all over the world and this is the nicest place by far because you've got all this natural beauty, weather, and a world class city (LA - SF is a shithole).

However, sane people are also leaving in their droves because of the insane politics. I have kids and don't want them turned into the giant pussies that the education system is set up for here.

You may be the moving van going out that’s empty coming back. The state will be in trouble if the upper middle and middle class all leave. Or it will become more like some nations that are super-rich and poor at the same time. I love and admire CA as you can see from above posts but I am not naive to the dangers lurking.

But where would you go to duplicate the high you get in LA? Seattle, Dallas, Miami, a mountain top? Those places have issues too, or no nearby beauty to escape to (e.g., Dallas).

[HonestBob]

You may be the moving van going out that’s empty coming back. The state will be in trouble if the upper middle and middle class all leave. Or it will become more like some nations that are super-rich and poor at the same time. I love and admire CA as you can see from above posts but I am not naive to the dangers lurking.

But where would you go to duplicate the high you get in LA? Seattle, Dallas, Miami, a mountain top? Those places have issues too, or no nearby beauty to escape to (e.g., Dallas).

I'll take 25 jobs with me - not even a speck on a drop in the ocean, but multiply that by the number of people who hate the PC bullshit and challenging business regs / taxes here and I think CA has a long term problem.

CO is edging everywhere else out for the win for me.

[mphgrove]

I'll take 25 jobs with me - not even a speck on a drop in the ocean, but multiply that by the number of people who hate the PC bullshit and challenging business regs / taxes here and I think CA has a long term problem.

CO is edging everywhere else out for the win for me.

The Apples and the Comcasts are the big drivers but small business is the day to day life blood. On regulation, i’ve done real estate in the last few years in both CA and FL. In Florida, I asked the realtor, “where is the rest of the package?” because there were only about 3 pages, whereas in CA there were 50 pages and the realtor had to keep trying to calm me down as I was being questioned as to whether anyone had ever died at the property and whether there were fog horns that made noise in the distance.