Chuck Ponzi July 22nd, 2009

California has staved off the day of reckoning for a few more months.  The can has been kicked further down the road with everything from taking from municipalities to pushing out payroll days to the next fiscal year (good thing they don’t have to conform to GAAP, or that wouldn’t have worked).

However, Jack Kyser is telling us that it’s not going to get much prettier.

Personal income will drop 2% in the state this year, the report said, the first annual decline since 1938.

“Most people haven’t experienced anything like this in their lifetimes,” said Jack Kyser, founding economist of the Kyser Center.

California’s jobless rate, which was 11.6% in June, will average 12.6% next year, according to Kyser, who also projected that Los Angeles County’s unemployment rate will be even higher, averaging 12.8% in 2010. The county’s jobless rate was 11.3% last month.

It’s going to be a doozy, and the economics aren’t getting any better.  Ever wonder why?  Well, the state and its municipalities are very generous to some people.  Take fire chiefs for example (I have nothing against them), but as the following story illuminates that a recent police chief retired at 51 with a $241,000/year pension plus still works as a “consultant” in the same job he just retired from getting paid $176,400/year.  Folks, that’s $417,400/year.  Retired.

The Wall Street Journal gives us the report on the outrage.

Still wonder why California is having budget problems?  Really?

Kyser says:

Kyser did not agree that the budget fix would help matters. Losses in revenue will continue to dog municipalities throughout the state, he said, potentially even pushing some into bankruptcy. Budget cuts will make it even more difficult to create jobs.

“The news from Sacramento is going to create more problems next year,” he said. “It could even get worse.”

It’s not getting better soon, though Kyser’s detractors say that the unemployment picture won’t go as high as the 12.6% he predicts next year.  I would only believe that with  mass exodus to nearby states/countries.

• Deflation , Forecasts
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