Median Home Sales Santa Clara County

							                                                                                                                                                 September 2001
ECONOMIC UPDATE
More signs of economic weakness were evident in recent construction and export activity. Construction activity slowed again in July,
principally in the San Francisco Bay area. Exports of California-made goods grew modestly in the first quarter, then declined from year-
ago levels in the second quarter.

    After June’s mixed results, California construction slowed across the board in July, with both residential and nonresidential permit
    volumes down from month-ago and year-ago levels. Residential construction, measured in housing units, dropped 5.7 percent from
    June and over 6 percent from July 2000. July’s seasonally adjusted annual rate of 125.2 thousand units was the slowest monthly
    rate in three years. Before July’s lackluster performance, residential construction in 2001 was running comfortably ahead of 2000.
    Through the first seven months of 2001, however, residential construction is besting the same period in 2000 by only 0.7 percent.

   Dramatic reductions in the San Francisco Bay area are the principal source of the construction slowdown. Total residential permits
    year-to-date in San Francisco, San Mateo, and Santa Clara counties have dropped 42.6, 36.9, and 14.2 percent respectively from
    the same period in 2000. Outside of this region, home building has actually risen 3.8 percent so far this year.

   Nonresidential construction was also slow in July, down 34 percent from June and 22 percent from July 2000, as measured by
    building permit values. Significant year-over-year drops occurred in all building categories except the small service station sector.
    Despite the July weakness, total nonresidential construction during the first seven months of 2001 is essentially unchanged from the
    year-ago level.

   California’s real estate market continued to show mixed results in July. The median single-family home price was essentially
    unchanged from June, but sales volume dropped 4.5 percent. On a year-over-year basis both prices and sales were up from July
    2000. Given the drop in sales, the inventory index of single family homes for sale climbed to 3.9 months from June’s 3.6 months.
    The index—the number of months needed to exhaust the supply of homes on the market at the current sales rate—stood at 3.2
    months a year ago.

   The slowdown in home sales remains concentrated in the San Francisco Bay area. Sales in Santa Clara County—the Silicon
    Valley—fell 22 percent from a year ago and notably the median home price actually declined in July by 3.4 percent. In contrast,
    strong home sales and price gains continue in Southern California.

   International economic weakness is now noticeably affecting California exports. Shipments of California-made goods to other
    countries in the second quarter of 2001 fell 6.6
    percent below the comparable 2000 figure. For the Exports Slow from 2000
    first half of the year, California exports were still up                                                  Made-In-California Exports
    2.9 percent, a gain well below last year’s 20.7                                                      Percent Change, Second Quarter
    percent jump.
                                                                      -30%     -20%        -10%          0%        10%         20%         30%     40%      50%      60%
    Second quarter weakness was confined mostly to
                                                                                                                                     24%
    the computers and electronics sector, where              Japan                                 -2%
    exports fell by 16 percent from the year-earlier                                                                                                        47%
                                                             East Asia
    pace. Industrial machinery, which excludes                                      -14%

    computers under the new North American Industry          Southeast Asia                                                            26%
                                                                                             -5%
    Classification System (NAICS), was also down by                                                                                                      1999-2000
                                                                                                                         12%
    6 percent. In contrast, both agriculture and food        Canada                        -8%                                                           2000-2001
    products and chemicals rose 17 percent.
                                                             Mexico                                                                              34%
                                                                                                  -3%
   Exports to eight of the leading ten countries                                                                                    23%
                                                             Europe
    declined, led by a 34 percent drop in South Korea,                                     -8%
    which was the fastest growing California market in       Americas                                         3%
                                                                                                               5%
    2000. Exports to Mainland China surged 38
    percent and shipments to the UK rose 3 percent.          Other           -20%
                                                                                                              4%
 Monthly Cash Report
 Preliminary General Fund agency cash for August was $316 million below the 2001 Budget Act forecast of $4.826 billion.
 Year-to-date, revenues are $142 million below expectations.
  Personal income tax revenues were $185 million below the month’s forecast of $2.388 billion. Withholding receipts,
    which were 11.2 percent below the year-ago level, were $189 million below the month’s estimate of $2.226 billion.
    Other receipts were $15 million above the projected level of $313 million and refunds were $11 million above the
    estimate of $151 million.
  Sales and use tax receipts were $4 million below the month’s forecast of $2.017 billion. August cash includes the
    remaining portion of the final payment for second quarter sales, as well as the first prepayment for third quarter sales.
    It appears that final payment receipts were
    somewhat lower than expected, which was offset by
    a slight gain in the prepayment. For July and
    August combined, the sales tax is $64 million above                        Ge n e r al Fun d Ag e n cy Cash
    expectations.                                                              2 0 0 1 Bud g e t Act For e cast
  Bank and corporation tax revenues were $79 million                                                               (Dollar s in Billion s)

                                                                              16.000
    below the month’s forecast of $130 million.                                                                                                 Actual     Forecast
    Prepayments were $12 million below the forecast of                        14.000
    $85 million and miscellaneous payments were $43
    million lower than the $129 million that was                              12.000
    expected. Refunds exceeded the forecast of $84
                                                                              10.000
    million by $24 million. September will be a
    significant month for this tax because the third                           8.000
    estimated payment for calendar year corporations is
    due September 15.                                                          6.000

  Revenues from the insurance, estate, alcoholic                              4.000
    beverage, and tobacco taxes came in $18 million
    below the $122 million that was expected. The                              2.000

    remaining revenues—pooled money interest income
                                                                               0.000
    and “other” revenues—were $30 million below the                                    July       Aug   Sep   Oct    Nov     Dec      Jan     Feb    Mar   Apr    May   Jun
    month’s estimate of $169 million.



   2001-02 Comparison of Actual and 2001 Budget Act Forecast Agency General Fund Revenues
                                             (Dollars in Millions)
                                              August                                          |                            YEAR-TO-DATE
                                                                             Percent          |                                                              Percent
Revenue Source                   Forecast         Actual      Change         Change           |         Forecast            Actual            Change         Change
                                                                                              |
Personal Income                     $2,388        $2,203         -$185          -7.7%         |           $4,372            $4,296                  -$76          -1.7%
Sales & Use                          2,017         2,013            -4          -0.2%         |            3,331             3,395                    64           1.9%
Bank & Corporation                     130             51           -79       -60.8%          |               344                198                -146         -42.4%
Insurance                                8             20            12       150.0%          |                15                 25                  10          66.7%
Estate                                  79             48           -31       -39.2%          |               158                133                 -25         -15.8%
                                                                                              |
Pooled Money Interest                   33             48            15        45.5%          |                72                102                 30          41.7%
Alcoholic Beverages                     24             25             1         4.2%          |                51                 51                  0           0.0%
Tobacco                                 11             11             0         0.0%          |                22                 22                  0           0.0%
Other                                  136             91           -45       -33.1%          |               127                128                  1           0.8%
                                                                                              |
Total                               $4,826        $4,510         -$316          -6.5%         |           $8,492            $8,350             -$142              -1.7%

               This is an agency cash report and the data may differ from the Controller's report to the extent that cash received by agencies
        has not yet been reported to the Controller. Except for "other" revenues, revenues are ranked in descending order of fiscal year magnitude.
                      Totals may not add due to rounding. The forecast is from the May Revision, updated for the 2001 Budget Act.