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Analyst: California Drought Not A Significant Hit To Economy

Rich Pedroncelli / AP
 

Rich Pedroncelli / AP

(AP) - California's nonpartisan fiscal analyst says the drought is not likely to have a significant effect on the state's economy or budget.

A report released Tuesday by the Legislative Analyst's Office says water cutbacks on farms and decreases in residential water use are not a drag on the broader state economy.

The report warns that drought is a long-term risk to the state economy if it slows down home construction or leads to higher food prices.

California's four-year drought has forced farmers to fallow fields and driven thousands of farmhands out of work. But the report notes that agriculture makes up only 2 percent of the state economy.

The analyst also says the drought so far has not led to broad changes in consumer spending or confidence.