Welcome to a new quarterly report tracking trends in our California economy – the largest in the nation and the ninth largest in the world. Currently, most information on the health of California's economy comes from the payroll employment survey, statistics on the housing and construction markets, and consumer spending on taxable goods. Unfortunately, this leaves us with an incomplete picture of the real growth in economic output and the status of the labor force overall.

To provide a better understanding of our economy, Beacon Economics – with the support of City National Bank – developed models to draw a more timely and complete picture. The findings will be highlighted each quarter in The City National Economy & Jobs Report, featuring estimates of state economic output growth and a broader view of the state of the California workforce.

Manufacturing has been one of the strongest contributors to California's recovery. This is due in large part to productivity gains by investments in IT. The California economy is estimated to have expanded at a 3.9% rate in 2013 and has outpaced the nation in terms of economic growth for the second year running. California is not in another housing bubble. The appreciation in home prices is due to fewer distressed properties dragging on growth and a lack of supply of homes for sale.

City National will post the next edition in June.

This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make an independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.