Economist Christopher Thornberg previews topics for Jan. 17 Forecast Webcast
Published: January 4, 2013
CSN: With the election behind us and Proposition 30 passing, do school districts have reason to hope for better conditions in 2013? Beyond 2013?
Thornberg: Prop. 30 will help the state balance the budget in the short run, and hopefully any excesses will go to re-funding education. Unfortunately, there is no guarantee where this money will end up. Beyond 2013, while Prop. 30 will bring more revenue to the state, it mainly comes from the income taxes of high-income earners, which are notoriously volatile. As such, it does little to fix the boom-bust nature of California's revenue system—something that makes it so difficult for school districts to plan for the long run.
CSN: What trends will you be watching as the new year gets started?
Thornberg: There are important political and economic trends to watch. On the political side, we should all be watching how Congress handles the federal budget deficit and debt ceiling. If negotiations surrounding these break down, the U.S. could be pushed into austerity mode with potentially recessionary consequences. In terms of economic trends, I'm watching both exports and housing as these could be the best sources of growth in the new year.
CSN: How about housing? Has California turned the corner?
Thornberg: Absolutely, and short of a federal government-led recession (i.e the Fiscal Cliff), we should continue to see solid gains in housing in 2013. Of course, while this will fuel property tax gains, it is also worth noting that price increases are only making California's already unaffordable market more so. This means the strains on low-income families will become worse.
CSN: We’ll be hearing much more from you during the Forecast Webcast about real estate, jobs, and the budget. What indicators might school districts keep an eye on until then?
Thornberg: As noted, watching the debates in Washington D.C. surrounding the federal budget deficit will be key because the outcomes will ultimately determine how good a growth year 2013 will be. The nation's deficit certainly needs to be unwound, but at a steady pace, not rapidly. Hopefully by the time of the webinar, we'll have a clearer view of this issue.
The 2013 Forecast Webcast is complimentary, but pre-registration is required; login information and a link to handouts will be emailed to all registrants prior to the webcast, from 10 a.m. to noon, Jan. 17.