Bank of the West Study Shows End of Federal Unemployment Benefits Will Not Derail California's Economy Impact on Economic Activity, Jobs and Tax Revenues Expected to be Modest
SAN FRANCISCO, Feb. 13, 2014 /PRNewswire/ -- Bank of the West Chief Economist, Scott Anderson, PhD, today issued a special report measuring how the end of Emergency Unemployment Compensation (EUC) program will impact California's economy over the short- and longer-term.
Anderson's research found that California, despite having a higher share of long-term unemployed, will be measurably impacted – yet not catastrophically so – over the next two years. In addition, according to Anderson, the economic impacts will be lower than estimates provided by the joint Labor Department and Council of Economic Advisors study. Anderson estimates:
- A loss in expired benefits of approximately $3 billion for California
- A loss of statewide business revenues of $4.3 billion
- A loss of 29,700 jobs and lost compensation of $1.2 billion in the state compared to what would be created if EUC benefits remained in place
- Immediate reduction of economic activity in California related to the reduced unemployed household spending will destroy $44.2 million in state taxes
- Industries such as healthcare, real estate, finance, manufacturing and retail together will lose more than $2.6 billion in economic output and 16,160 jobs with $632 million in lost earnings
- The retail sector is expected to lose the most jobs—4,708
- Over the next two years, the state is expected to lose $140.5 million in tax revenues for the state
For perspective, Anderson noted that California created 235,700 net new jobs in 2013, a 1.6% increase in non-farm payrolls. A loss of a net 29,700 jobs would have reduced the state's job growth by 0.2 percentage points. The loss of $4.3 billion in state output would also subtract about 0.2 percentage points from California's Gross State Product growth.
"In short, our estimates for the economic impact on California are at the lower end of the U.S. estimates and imply the national estimates of the EUC impacts might be too high," Anderson noted.
About Bank of the West:
Founded in 1874, $65 billion-asset Bank of the West (www.bankofthewest.com), member FDIC and equal housing lender, offers a wide range of personal, commercial, wealth management and international banking services. The bank operates more than 600 retail and commercial banking locations in 19 Western and Midwestern states. Bank of the West is a subsidiary of BNP Paribas, which has a presence in 80 countries with nearly 200,000 employees.
The full report along with its methodology can be found here – http://gowe.st/Mh58NF.
SOURCE Bank of the West