Comerica Bank’s California Economic Activity Index was flat for the seventh straight month in February, at a level of 99. February’s reading is 36 percent, or 26 points, above the index cyclical low of 73. Year-to-date the index is even with the average for all of 2011.
“The economic recovery of California has stalled as shown by another flat month for our California Economic Activity Index. Silicon Valley remains vibrant in an otherwise lackluster state economy. However, the drag from a still-depressed housing sector is a dominant and smothering economic factor for much of the rest of the state,” said Robert Dye, Chief Economist at Comerica Bank. “State tax revenues are below forecasts and this is increasing stress on state finances. Expected cuts in federal defense spending will also weigh on the state on the years ahead. Slower growth in Asia is yet another risk factor that may weigh disproportionately heavy on the California economy.”