ELECTIONS ‘94: IMPACT ON BUSINESS : Elections Accent an Upbeat Economic Outlook : Recovery: Returns seem to endorse state’s pro-business moves. Job growth is accelerating.
California’s business community, accustomed to bad news in recent times, took a measure of comfort in Tuesday’s elections, and not just because of the results: For the first time in decades, campaign after campaign emphasized the need for jobs and economic growth.
“It’s about time,†said Gary Heathcote, an architect in Westlake Village. “It’s a little bit late--but late is better than never.â€
Gov. Pete Wilson’s reelection was heartening news to business executives who applaud his efforts to cut red tape and make the state a more congenial location so that companies will remain.
“It’s great news for people who create jobs,†said Wilford D. Godbold Jr., president of Zero Corp. in Los Angeles. He added that “the theme transcended party lines.â€
The election took place at a time when California’s economy confronts powerful forces, both helpful--such as the expanding U.S. recovery--and harmful--such as the budget woes in Sacramento. In this mixed picture, some business representatives reacted to the returns with tempered optimism.
Ray Remy, president of the Los Angeles Area Chamber of Commerce, said Wilson’s victory reflects strong business support, but he still worried about the state’s “very intractable†budget problems.
Indeed, even as Wilson savored victory, California’s troubled economy was not far from his mind. The Golden State, he vowed on Election Night, would be expanding faster than the nation as a whole within the next two years.
That view is backed up by an assortment of analysts who believe a long-awaited statewide recovery is slowly gathering momentum and that continuation of certain pro-business policies may help to a degree.
Nonetheless, California’s economic future is also being shaped by worldwide forces beyond the domain of state policy-makers, experts said Wednesday. Moreover, state issues that matter enormously to the economy, such as crime and education, are the products of trends that have lasted many years.
“No one person is responsible for all the bads or the goods in the economy,†said Tapan Munroe, chief economist at Pacific Gas & Electric Co. in San Francisco.
Matters of great significance, such as the conversion of defense factories to peacetime uses and the emergence of new, job-creating industries, are largely determined by free-market forces, he added, noting, “Government doesn’t do this.â€
Other important policies are set at the federal level. For instance, the possibility of new tax policies emerging from a Republican-dominated Congress, such as a cut in the capital gains rate, could boost the fortunes of fast-growing firms in technology, trade and other fields important to California, said Gary Schlossberg, an economist at Wells Fargo Bank in San Francisco.
On this much the analysts agree: The state has finally begun producing jobs again. Official government statistics suggest the increase has been extremely modest--perhaps in the range of a few thousand jobs a month--while other analysts put the figure in the range of 10,000 to 15,000 jobs a month.
An ebullient Wilson on Tuesday night cited an Oct. 18 forecast from First Interstate Bancorp that said California will outpace the nation in the rate of job growth by 1996, when the state is expected to be gaining 20,000 to 25,000 new jobs a month.
California was generating 30,000 jobs monthly during the strongest periods of the 1980s, said Adrian Sanchez, regional economist with First Interstate. During the darkest days of recession in the early 1990s, the state was losing jobs at an average rate of more than 27,000 a month.
“All Californians have been fighting like junkyard dogs to turn this state around. And you know what? You are succeeding,†Wilson told supporters. “Unemployment is down. Investment is way up. Three times more venture capital came to California last year than any other state.â€
In large part, California’s job-growth rate can be expected to compare increasingly well to the nationwide rate because California’s recovery is in an earlier stage.
Still, business leaders and economists Wednesday cited Wilson’s efforts to keep employers and streamline red tape as examples of policies that can have some helpful impact on the economy.
Sanchez cautioned, however, that “there’s probably still a lot to be done--and I’m sure the governor would agree.â€
On a more fundamental level, one scholar suggested that the election results conveyed a message that could have significant long-term effects on the economy: Frustrated Californians are demanding a smaller public sector, a solution to the state fiscal woes and a reduced tax burden, said Frank C. Wykoff, an economist at Pomona College.
They also want the federal government to do more to help the state in return for the enormous taxes Californians pay, he said.
In the long run, “California could be a hell of a place to do business,†Wykoff said. “You could have very, very positive economic growth.â€
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