NewsWatch: 2009: California's Economy

[Narrator:] From the University of California at Davis, this is NewsWatch.

[Paul Pfotenhauer:] Most of what we hear and see about California's state economy is bleak. While the road ahead does look stormy, there are some bright spots in that dark cloud. Just ask economic historian Greg Clark.

[Greg Clark, UC Davis Economic Historian:] Surprisingly the state budget shortfall is really chicken feed relative to the overall economy. It is about one percent of the income of California. The federal budget deficit of the present is about 13 percent of national income and so we could make the entire state budget problem go away for about $600 dollars per person — whether this is solved or not it is no going to make any profound difference in the future of California.

[Paul Pfotenhauer:] Clark, an internationally recognized expert in economic growth, says business — not government — drives California's engine.

[Greg Clark:] In the long run our wealth, income depends on the efficiency and productivity of industry and the good news seems to be that these downturns don't damage that and in fact there is some evidence that in may actually improve productivity performance of industry and so once we get through this in those terms there isn't much to fear for the future of the California economy.

[Paul Pfotenhauer:] Being an economic historian, Clark says if history is a guide than there is reason for optimism on the horizon. He says that economic crises typically come with a reverse side of opportunity. Paul Pfotenhauer, reporting from UC Davis.

[Narrator:] For more information please log on to broadcast.ucdavis.edu.