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Wednesday, May 18, 2022

State’s New Chief Economist Facing Hard Policy Choices as Deficit Climbs

State’s New Chief Economist Facing Hard Policy Choices as Deficit Climbs


Orange County Business Journal

This month, the state will have its new chief economist and he will be faced with steering California through a sharp slowdown and a possible recession.

Longtime bank economist Howard Roth is expected to take over as chief economist at the Department of Finance when Ted Gibson retires.

“It is a demanding job in normal times because it is the state’s budget agency,” said Tom Lieser, executive director of the UCLA Business Forecasting Project. “And (Roth) is expected to stay on top of trends in revenues and expenditures.”

And these aren’t normal times. “He is coming in at a time when California’s economy is coming off a period of extraordinary strength and may be heading into a recession which is creating havoc with the state’s budget,” said Gerd-Ulf Krueger, vice president of market research at Irvine-based real estate investment adviser Institutional Housing Partners.

California is heading for its biggest budget deficit since 1991 and is likely to see a substantial shortfall in its revenue collection this year and next. Analysts project the state to have a deficit of anywhere from $8 billion to $14 billion next year.

“Coming up with a balanced budget will be tough because the revenues are going in much lower than expected. Either we cut spending or increase taxes,” Roth said.

His first job as an economist was at the Federal Reserve Bank in Kansas City, where he worked from 1982 to 1988. He then joined Security Pacific National Bank its 1992 acquisition by Bank of America. He moved to Bank of America until it was acquired by NationsBank and its headquarters were moved to Charlotte, N.C. In 1999, he joined an investment bank in San Diego.

“What I need to do now is learn the part of the job that is new to me,” he said. “Understanding the ramifications of all of the voter propositions passed in the last three decades that pertain to government finance is important in doing this job. Unfortunately, we are right in this budget situation so it difficult to think of anything else right now.”

Roth has known Gibson for many years, and when Gibson decided it was time to retire, he started looking for a successor. “Ted Gibson had casually talked about it to me earlier this year. He wanted to see if I was interested,” Roth said. “He was a little surprised that I was; the job can be a bit thankless at times. But it is a chance to give something back to the community. Plus I had enough of those Southern California commutes.”

Roth got his undergraduate degree in engineering from Case Western Reserve in 1969. Fresh out of college in the late ’60s he worked for General Dynamics Corp. in San Diego as a missile engineer. In 1976, he enrolled in the master’s program in economics at the University of Michigan and in 1982 he got his doctorate.

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