“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: California population growth has failed to top the national pace for the third year in a row — a rare occurrence that previously happened amid grand economic uncertainty.
Source: U.S. Census Bureau
Trend reported: As of July, census reports California had 39,557,045 residents — again, No. 1 in the nation — and up 157,696 in a year — the third-largest gain in the number of people. But the growth pace — the increase’s size relative to the state’s big population — was only 0.4% in 2018. That ranks just No. 25 among the states and below the 0.6% growth nationwide. It’s not a blip, rather the third consecutive year the state could not keep pace with U.S. population growth.
Dissection
This continued cooling can have a negative impact on industries such as real estate and retailing, which thrive on a growing number of customers. Population counts now have big political implications, too: the 2020 population count will determine how many members of the House of Representatives and electoral votes the state controls next decade.
California’s above-average growth was once seemingly a given, as from 1930 to 1992 the state’s population consistently outpaced the nation. Since then, the state has trailed in 10 combined years in three periods.
Two previous subpar eras had shaky economics. In 1993-1996, the state’s defense industries suffered after the Cold War’s end pruned military spending. In 2005 to 2007, California was an early victim of the pending Great Recession as lending dried up and real estate suffered.
The past three years, comparatively speaking, have been good times for most Californians. But that economic surge has made the long-expensive state even pricier, curbing the state’s relocation appeal to out-of-towners and nudging fiscally challenged residents out.
My trusty spreadsheet, comparing census details for the past three years of slow growth vs. the previous five years, found several key factors are contributing to California’s chilled population growth …
Population change: First, let’s ponder the scope of the cooling. The 201,301 average number of added residents over the past three years was No. 3 among the states. Still, it’s down from 326,448 in 2011-15 — a steep drop in growth vs. 2011-15 of 125,147 annually or 38%. Nationally, growth was down in this timeframe, too — but only 6%.
Outmigration: Debate all you want the reasons why more folks leave than arrive. Cooling population growth is heavily tied to more domestic departures than arrivals. California’s average net exits to other states ran 138,754 annually in 2016-18 — second-worst among the states — vs. a net loss of 54,738 the previous five years. That’s a jump of 159%.
Deaths: Californians are getting older and that means an average 271,323 residents passed away annually over the past three years — No. 1 among the states — vs. 244,645 in 2011-15. That’s up 26,678 or 11%. The nation’s aging, too, with deaths up 7% in the same period.
Births: The Golden State is still relatively young as shown by the average 483,166 births annually in 2016-18 — No. 1 among the states. But that’s off 18,051 or 4% from the previous five years. Nationally, birth fells 1%.
International arrivals: California continues to lure folks from around the globe with an average 128,774 new residents from abroad — No. 2 among the states — the past three years. For all the tough talk on immigration, California’s foreign inflow has grown 1,555 or 1% since 2011-15. And nationally, it’s up 11%.
How bubbly?
On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … THREE BUBBLES!
It certainly it looks like those who wish for slower California growth are having their way. And it can be argued that slower growth helps reduce pressure on the state’s limited housing supply and aging and stressed infrastructure.
Still, be careful what you wish for. Your California employer — or the bosses of your family members or friends — may need more customers to thrive, if not survive. Population growth creates business opportunities.
That’s why it’s no surprise that previous population coolings came amid economic stress.
