California’s Economic Crisis Is a Big Reason Why It’s Still Struggleing

California repeatedly warned about spiking gas prices, fragile supply. But fixes never came.

California is in the same precarious spot it was in during the Great Recession. Its public services are suffering and its economy is contracting.

It’s no wonder, then, that even as California’s finances are cratering, it continues to run large budget deficits.

The state has been trying to deal with what’s become a $25-billion hole every year, and it wants to avoid a repeat of the fiscal 2018 shortfall, which left the state with more than $100 billion in unfunded liabilities and left the state with no contingency plan for paying off those obligations.

To be sure, many Californians are struggling. At the end of March, a University of Southern California and California State University, Fullerton survey found that the state was the third most economically depressed state in America, according to the American Community Survey.

In the same survey, more than half of the respondents reported income that fell below the poverty level. The rate of unemployment hit 7.4% in February.

The financial crisis has been a major reason for the state’s economic woes. The state’s economy is highly dependent on the housing industry. Home prices have crashed and foreclosures have exploded.

Despite these setbacks, the state is still struggling. Despite all that has happened, the state had the highest unemployment in the nation at the end of 2018, according to the Bureau of Labor Statistics, and, even worse, its unemployment insurance fund was almost depleted.

What Went Wrong?The state’s problems stem in no small part from the bursting of the housing bubble.

In the years before the bubble, residential real estate sales soared along with the price of housing. In the peak years of the housing boom, in 2007 and 2008, California’s housing market boomed with record rates of home sales and prices.

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