Comerica Bank's California Index Improves

Robert A. Dye, Ph.D.


Daniel Sanabria

California Capital City

Comerica Bank's California Economic Activity Index increased in May to a level of 114.0. May's reading is 23 percent above the historical low...

Comerica Bank's California Economic Activity Index increased in May to a level of 114.0. May's reading is 23 percent above the historical low of 92.7 set in June 2020. The index averaged 107.9 points in 2020, 18.9 points below the average for all of 2019. April's index reading was unrevised at 110.9.

Our California Economic Activity Index improved for the eleventh consecutive month in May. Seven of the sub-indexes increased in May including nonfarm employment, unemployment insurance claims (inverted), house prices, state total trade, hotel occupancy, enplanements and state revenues. Industrial demand for electricity and housing starts declined for the month. Recent gains in the California Index are consistent with a robust recovery for the state's economy through May. In June, California removed most pandemic restrictions. The delayed reopening puts California's recovery behind other key Comerica markets. However, California's real GDP may see above average gains in Q3 as business activity rebounds, particularly in the services sector. A major risk to the recovery is the current rise in COVID cases due to the Delta variant. Over 70 percent of California's population, 12 and older, are at least partially vaccinated. So, while a third quarter surge in cases could lead to some disruptions to activity, we do not currently expect California to move back into statewide stricter social policies. A headwind to household spending in the second half of 2021 is the wind down of Federal enhanced unemployment benefits which are set to expire in September. California nonfarm payrolls remain 1.24 million below February 2020 levels. Even as hiring improves, the labor reuptake will not be 1-for-1. This means lower incomes for thousands of California households by Q4.

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July 20, 2021
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist

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