. . .
For California and the nation, there is a long list of things that could go wrong. A surging budget deficit could stoke higher interest rates. And if the recent upheaval in stocks signals a longer-term decline, it would hurt California in particular because its budget relies heavily on high earners whose incomes rise and fall with the market. President Trump’s moves to upend longstanding trade arrangements could be a setback for the state, home of the country’s biggest port complex. And because the growth of the technology industry has played a huge role in California’s recent boom, a drop in company valuations or in venture capital investments would reverberate swiftly through the state’s economy and tax receipts.
“I don’t think there’s any reason to believe we are going to have a recession this year or the next year,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles, referring to Mr. Brown’s grim forecast. “He’s just pointing out the obvious, which is that things feel good now but there is going to come a time when all hell is going to break loose — and we better be ready for it.”
