Welcome to Happening in California, a brief look at political news, insights, and analysis of the world’s fifth-largest economy.

Is California poised to play the leading role in a technological revolution that will cause the extinction of all living things or usher in a new era of human flourishing?

When it comes to artificial intelligence (AI), there are two strikingly polarized views. On one hand, you have pessimists who warn that AI advancements might spell the end of humanity. On the other hand, you find optimists who compare AI’s potential as transformative to humanity as the printing press or even the discovery of fire.

However, one thing is abundantly clear: AI is on the cusp to igniting another economic boom in California — reshaping industries and driving unparalleled growth.

Here are the basic facts to know…

Cheers,
Tom Ross | President and CEO | Swing Strategies

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The Big Picture: California is leading the world in AI development that could set off an economic expansion greater than any before.

California is no stranger to transformative booms…

• First, the Gold Rush drew prospectors from across the globe.
• Later, the state’s fertile soil and climate fueled an agricultural boom that made it the world’s breadbasket.
• The advent of motion pictures and Hollywood turned California into the entertainment capital of the world.
• From the 60’s to the 80’s, Silicon Valley’s rise as a tech epicenter gave us household names like Apple, Oracle, Cisco, and Intel.
• More recently, the DotCom boom and the birth of the internet-based economy led to the rapid growth of businesses like Google, Facebook, PayPal, eBay, and Airbnb.

Now, the Golden State finds itself riding the early waves of an AI Gold Rush.

Today, the AI Gold Rush has taken center stage, and California is once again at the heart of innovation. Seven of the top ten AI chip manufacturers and 35 of the most promising privately held AI companies hail from the Golden State. Additionally, the newest member to the so-called “Trillion Dollar Club,” Nvidia, owes its ascension to the AI boom.

In economic terms, AI is projected to have an impact in California of well over $400 billion by 2030, affecting up to 11 million jobs. In 2022 alone, California led the nation in AI job postings (142,154), followed by Texas (66,624), and New York (43,899).

Despite California’s many woes — from a sky-high cost of living and homelessness crisis to massive structural governmental debt and a shrinking population — an AI-propelled economic upswing could be just the thing to save the state…

No other city has characterized California’s “decline” more than San Francisco:

• The city experienced a 6.3 percent population loss between 2019 and 2021, leading to a loss of nearly $7 billion in household income.
• Nearly a third of offices remain vacant since Covid, causing property values to plummet.
• A sharp rise in property crime has contributed to an exodus of major retailers.
• A decline in real estate taxes and sales taxes is projected to cause a $780 million deficit over the next two years.

However, the recent surge in AI is reinvigorating San Francisco’s tech community and drawing investments into the city. Venture capital investments in AI and machine learning companies in San Francisco have reached new heights, with startups raising $18.5 billion in the first quarter, accounting for 82% of US investments in the segment. Furthermore, San Francisco-based AI companies are expecting to lease approximately three million square feet of office space by the end of the year.

San Diego is also making a name for itself in the AI field with a higher level of AI activity than many other US cities, according to a report by the Brookings Institution, suggesting that San Diego will emerge as a top AI hub in the country.

The Bottom Line: California is once again emerging at the center of innovation and investment with profound implications for the state’s economy. AI may or may not destroy the world, but it will save California first.

As always, give us a ring or shoot us an email if you’d like to chat about what’s happening in California.