California EconoTalk
A Bleak Jobs Report
New America Media, News analysis, Stephen Levy , Posted: Jul 20, 2009
Editor’s Note: Stephen Levy is director and senior economist of the Center for Continuing Study of the California Economy (CCSCE) in Palo Alto. CCSCE is a private research organization founded in 1969 to provide an independent assessment of economic and demographic trends in California. NAM will regularly feature California EconoTalk, with Levy’s insights and analysis on California’s economic landscape, which originally appear on the CCSCE website: www.ccsce.com.
California remained in full recession mode in June with the loss of an additional 66,500 jobs.
Do not be fooled by the month-to-month stability of the unemployment rate at 11.6 percent. June was a terrible month for the state economy. California has trailed the national economy during the past year with job losses continuing to exceed the national average.
The recession continues to bring job losses and rising unemployment across the nation. There are now six states with unemployment rates above 11 percent and another six with rates above 10 percent. California’s 11.6 percent unemployment rate trails Michigan (15.2 percent), Rhode Island (12.4 percent), Oregon (12.2 percent), South Carolina (12.1 percent) and Nevada (12.0 percent).
The number of unemployed residents declined as measured by the household survey but that surely is a misleading sign of the economy’s strength and could only be caused by people dropping out of the labor force. Otherwise there is no way that the unemployment could fall in a month with 66,500 job losses.
The recovery fate of California and other states depends on the strength and speed of the federal stimulus package and the pace of worldwide economic recovery. There are no indications that private sector activity will turn up soon in the absence of aggressive stimulus efforts or worldwide growth.
The job losses were widespread and included a 6,700 reduction in government jobs—probably the first in an upcoming series of government job losses. The income losses in the sector are more severe as many workers are working reduced hours as a result of furloughs—voluntary and forced.
There are some positive signs in home resale activity, corporate profits and the banking sector, but the ultimate test of recovery is job growth, and today’s news says job growth is still a future hope but not yet a reality.
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