A Recession Would Be Really Bad News For California Especially, Moody's Stress Test Says
Any future recession would have negative ripple effects across the entire country, but California would fare far worse than other large states, according to a stress test by Moody's Investor Service.
According to Christopher Thornberg, founding partner of Beacon Economics, the findings are correct. He says recent history has taught the state some valuable lessons, according to San Francisco CBS affiliate KPIX.
He says the problem lies in California's "excessive reliance on income taxes" as a state revenue source.
This is especially true when it comes to revenue that relies on those who make higher salaries since their income can be volatile, according to Christopher.
He says such stress tests contain vital information, especially for those who work in city and state government since California would end up paying higher costs for the money the state has to borrow. [KPIX]