CLU/CERF: Policy, Politics and Prognostication (Part One)

By Sheryl Hamlin

CLU/CERF, an acronym known and valued in the educational and business world, stands for California Lutheran University Center for Economic Research and Forecasting. CERF specializes in macro-economics. Macroeconomics looks at the broader picture in the economy, rather than focusing on detailed markets or indices.

Recently rated #2 by NABE (National Association of Business Economics) in providing the most accurate forecasts, this article says that CERF is second only to Fannie Mae.


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According to Dr. Gerhard Apfelthaler, Dean of the School of Management, the students from the Masters of Science program in Quantitative Economics have gone on to successful, jobs with prestigious firms like the Milken Institute and are in demand because of their quantitative modeling skills.

The seminr on November 10, 2016, two days after the November 8, 2016 election, featured speakers from CLU/CERF, as well as local and Sacramento political analysts. This is a multi-part report of this half-day event held at the Serra Center in Camarillo attended by over 200 people anticipating the prognostications of these noted experts. The featured speakers were:

  • Dan Walters, Journalist and Columnist, The Sacramento Bee
  • Joel Fox, Co-Publisher and Editor-in-Chief of Foxandhoudsdaily.com
  • Bill Watkins, Ph.D., Executive Director, CERF
  • Matthew Fienup, CERF

Dan Walters

Anyone who follows California Politics, reads Dan Walters at the Sacramento Bee (sacbee.com). His pragmatic insight and knowledge of California policy and politics are essential reading.

About the election Tuesday, he said that locals (in Sacramento) watching the election “kept waiting for it to change” and were “stunned” with the results. Many had campaigned in Reno for Clinton because they knew Nevada would be an important state. Comments he heard were “strangers visiting alien land” and “the red tide stopped at the Sierras”.

He reminded the audience that California went from “red” to “purple” to “blue”. He theory is that when Los Angeles tilted left, the entire state tilted with it. And, soon, Independent registration will outnumber Republication.

The Democrats have a 2/3 supermajority in the Assembly and are one seat away from a supermajority in the Senate pending recount. See article for update. The “progressive agenda” has been achieved in areas such as immigration, healthcare, climate change, minimum wage, farm worker overtime, plastic bag ban, rich surtax, and new cigarette taxes. Interestingly the death penalty has yet to be repealed, despite several attempts. And, of course, there is always talk of secession with California as the 5th largest economy in the world.

What will happen with the Federal Government going “red”? First of all, there will be rivalry over healthcare. The ACA (Affordable Care Act) has been widely embraced in California, particularly with Medicaid expansion where 13.5 million people are now on Medicaid, which amounts to 1/3 of the population. California is dependent on the Federal government for these costs, he said, as well as on the subsidies to health insurance premiums bought through Covered California.

Other areas where California is vulnerable are the bullet train funding and the cap and trade funds, where these options are not selling. The reality is that the “progressive” California agenda depends on the Federal government, he said.

Governor Brown warns of the next recession around the corner and has had to fight for his rainy day fund, so the $100 billion over 12 years to be raised by the tax extension of the “temporary” tax on the rich will be important to maintain the “progressive” programs.

Some predict that Trump will cause the next recession, said Walters, but the State is dependent on the high income earners who profit from the advancing, lucrative capital markets. One percent (1%) of California taxpayers pay 50% of the state revenues, so a recession could be devastating on the State.

When will the “temporary” surtax become permanent? Will this cause an exodus from California?

And, Walter reminds that the next governor will be hit with three problems: ACA costs, budgetary problems and a recession. Candidates for governor include Lt. Governor Gavin Newson, who also has presidential aspirations, Anthony Villaraigosa, former Mayor of Los Angeles, John Chiang, current California Treasurer, Delaine Eastin, former California Education Secretary, and potentially Tom Steyer, environmentalist. But Steyer has been giving the governorship second thoughts after the election.

The election of Kamala Harris to the Senate may change the 2018 election. Governor Brown must appoint someone and theoretically, says Walters, Brown would prefer someone who would not only fill out Harris’ term, but would run again. Look for names to be surfacing for this appointment soon. And rumour has it that Brown is considering Anne Gust Brown, his wife, for the AG job.

The reality is that California and the country are overdue for a recession, says Walter. State revenues are below expectation per the controller, so the next administration will have a challenge. Details on the state revenues are here.

The report on the CLU/CERF meeting will continue in part two.

For more information about the author, visit sheryhamlin.com


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One Response to CLU/CERF: Policy, Politics and Prognostication (Part One)

  1. Sh November 13, 2016 at 9:43 am

    Also, said Walters is the chance Senator Feinstein might not run in 2018, which could change the 2017 race.

    Reply

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