— This is the script of CNBC's news report for China's CCTV on September 1, 2020, Tuesday.
If you looked at California as a single economy, it would be the fifth largest in the world, it is the economic engine and innovation center of the United States. But businesses and residents are increasingly fleeing the state in the face of multiple challenges, including wildfires and outbreaks. The companies we're looking at right now are the ones that have recently announced that they're moving out of California. And one of the companies that got the most attention was Palantir technologies.
The big data processing company, based in Palo Alto, the heart of Silicon Valley, announced last week that it was moving its headquarters to Denver, Florida. Between 2008 and 2019, 18,000 companies left California for more tax-friendly states, such as Arizona and Nevada, according to a firm that helps companies relocate. In addition to the ongoing wildfires, the heat in California has also caused power outages, affecting production and livelihoods. California is also one of the hardest-hit states in the country, with the fifth-highest unemployment rate and a budget deficit of more than $54 billion. To pay for the budget, California lawmakers are planning to raise taxes. If passed, California's corporate tax rate would rise, as would income taxes for high-income earners.
One consequence of all this is that California is becoming less attractive to its residents.
Redfin, an American housing-services firm, found that in July, the number of people seeking to leave San Francisco and Los Angeles was second only to New York City among metropolitan areas in the United States. California has also seen the largest increase in commercial real estate available for lease in the country since the outbreak. Just last Friday, Pinterest announced it was canceling a large commercial lease in San Francisco.
On August 28, California's governor announced plans to reopen the state to take further steps to restore normal economic activity. A slight cooling of the weather in recent days has also helped contain the fire. But both outbreaks and wildfires will have longer-term effects in California. The departure of businesses and residents adds another complication to California's prospects, Next, will there be more people and business leave California? We will keep an eye on this issue.