The cost of renting a 26-foot U- Haul moving truck for a one-way trip from Los Angeles to Las Vegas is US$1,080. The same move in the opposite direction costs only US$133.
To economist Brian Wesbury, the difference in cost is an accurate snapshot of the economic climate in California: People are moving out of the state as opportunity diminishes and few want to move into a slumping economy.
A one-way U-Haul move from Los Angeles to Phoenix costs US$837 while the return costs US$116. San Francisco to Boise: US$2,024. Return trip: US$310.
Compare those rates to what U-Haul charges for the same truck between two Midwestern cities. A U-Haul rental from Chicago and Detroit costs US$419. The return rental is almost identical in price at US$449.
"Obviously, California is having a hard time keeping U-Haul trucks in the state," wrote Mr. Wesbury, in a note to clients.
Mr. Wesbury, who works at brokerage firm Griffin, Kubik, Stephens & Thompson in Chicago, says the Chicago-Detroit rates show the flow of trucks between the two cities is virtually equal when compared with the flow of trucks between California and other western cities.
The Golden State is in a slump, and people are leaving en masse, and Mr. Wesbury says it will prove to be a political test for the state's new governor to equalize the growing disparity in U-Haul rates.
"Arnold Schwarzenegger's success as Governor of California can be measured by his ability to stop migration and bring U-Haul rates back in balance."
While economists usually look at indicators such as personal income growth and state gross domestic product as barometers of economic climate, Mr. Wesbury says such indicators don't accurately portray what's going on at that moment.
Take the example of personal income growth. During the 12-month period ending March, 2003, personal income in California rose 3.5%, while in neighbouring Arizona and Nevada it grew 4.0% and 4.7% respectively.
While the number shows a gap between the states, it also represents a trend that occurred in a past timeframe.
Mr. Wesbury says most indicators fail to depict the here and now. For that, he prefers to look at market prices, such as U-Haul rental rates.
"A much better real time indicator of California's ability to create economic opportunity is the cost of renting a U-Haul truck," he wrote.
"Because markets bring together the decisions of millions, they always provide signals that are much more accurate than forecasters, politicians or the press."
CALIFORNIA EXODUS: The cost of renting a 26 ft. U-Haul truck one way:
Los Angeles to Las Vegas: US$1,080
Las Vegas to Los Angeles: US$133
Los Angeles to Phoenix: US$837
Phoenix to Los Angeles: US$116
Los Angeles to Denver: US$1,908
Denver to Los Angeles: US$498
San Francisco to Boise: US$2,024
Boise to San Francisco: US$310
Chicago to Detroit : US$419
Detroit to Chicago: US$449
Source: Griffin, Kubik, Stephens & Thompson Inc.
jchow@nationalpost.com
