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American Morning
California Fifth Largest Economy in the World
Aired June 18, 2001 - 10:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: We turn now to the economy of California. Despite problems of keeping the lights on, the state is something of an economic beacon. New figures out showing that California's economy, California by itself, is the fifth largest in the world. For more on this, we're joined by Jack Kyser. He is chief economist with the L.A. Economic Development Corporation, the group that released those new economic figures.
Jack, good morning. Thanks for being with us. I know it's a little bit earlier in L.A. at this hour.
JACK KYSER, L.A. ECONOMIC DEVELOPMENT CORPORATION: Not too bad. I'm glad to be with you.
KAGAN: Yeah, it's always good to get up and talk about good news, especially for California. Now, to put this in perspective, once again, we're talking just about California and not the rest of the U.S. California by itself, the fifth largest economy in the world.
KYSER: That's correct. We do...
KAGAN: Beating even France?
KYSER: Beating even France. We do this analysis every year and this year we moved up one place and leaped over France.
KAGAN: So is this a situation where California is doing that great or France with the euro is doing not that well?
KYSER: A combination of factors. Of course, a weak euro versus the U.S. dollar. But California had a spectacular year last year, 530,000 new jobs. That's going to be tough to beat this year.
KAGAN: Tell us some of the sectors that are doing so well.
KYSER: The sectors that did extremely well last year, technology, international trade, tourism, entertainment and even the state's agricultural sector did not have any problems to deal with.
KAGAN: Now, this is a little bit confusing here, Jack, because these are the sectors that are supposedly doing so great yet we heard so much bad economic news out of California over the last year. Let's start with energy. Reporting yet again today, it looks like California could face more rolling blackouts. That has to be a huge concern to the business community of the state.
KYSER: Very definitely. And the energy crisis really cropped up early in 2001. One thing we do point out is that you do have 30 municipal owned utilities here, including Los Angeles Department of Water and Power. So not every area in the state is going to be subject to rolling blackouts.
KAGAN: Moving on, you say technology doing well, yet how many of my friends in the dot.com business are looking for other work right now?
KYSER: That's right. And again, the dot.com meltdown hit early in 2001. And you have to sort of look at the tech sector, you know, from a variety of forces. You have what we call the old line tech companies like Oracle, Sun, H.P. and then you have some of the new tech companies, and it depends on where you are in the state of California as to what type of technology you're going to be dealing with.
KAGAN: And the entertainment industry, this is an industry that has faced some major -- the possibility, at least, of some major strikes this year. Isn't that having an economic impact?
KYSER: Well, it had a very unusual economic impact. You had a burst of production activity early in the year to stockpile product in anticipation, possibly, both the WGA and SAG going out. The WGA contract has signed, sealed and delivered and now we have the sort of the nail biting time trying to get the SAG contract wrapped up.
KAGAN: You mentioned that it depends where you are in the state. Having grown up in southern California and went to school in northern California, I know there's a rivalry there and I would imagine it's there on a business front as well. And then if you add in central California with the agricultural industry, is there any kind of work or synergy of getting the different parts of the state to act as one to protect California's interests?
KYSER: It's very, very difficult because each part of the state has its own economic base. It has its own personality as the way it approaches business. And if you go to Sacramento right about now, it's somewhat chaotic with the debate over the energy situation. One thing that we've noticed is that the voice of small to medium sized business, which is really what drives California's economy, is not being heard.
KAGAN: You hear it sometimes on the air waves and you hear some of those business owners saying if this keeps up we can't stay in California. We're going to have to go somewhere else. Is that a concern?
KYSER: Very definitely. Just last Friday, we got a call from a real estate broker who's dealing with a client who's thinking about going to Las Vegas. There's even a Web site called leavingcal.com, where all these states are trying to lure business away. One thing you have to look at, it's very expensive, very difficult for small to medium sized businesses to make such a move. And what we're telling them is this is a two year problem. Probably by the end of 2002 we're going to be up to our eyeballs in kilowatt hours. And what you're seeing is a pretty innovative response by the business community.
KAGAN: Hoping that they'll just stay put.
Jack Kyser, thanks for getting up early and visiting with us this morning. Appreciate it.
KYSER: My pleasure.
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