Get ready for two years of 9 percent unemployment.
California and Sacramento's jobless rate will top 9 percent sometime early next year and won't fall below it until early 2011, according to an economic forecast released Tuesday by the University of the Pacific.
The higher unemployment is the obvious result of a deepening recession as the economy moves well beyond the initial job losses in construction and mortgage lending.
"We're out of the housing thing and into a pretty severe … traditional structure of a recession," said Jeff Michael, director of UOP's Business Forecasting Center.
The state has lost about 100,000 jobs so far; Michael said another 300,000 jobs will disappear in 2009.
The recession should end in late 2009. And that's if things go well and the federal government adopts the appropriate policies, he said.
Michael advocates a big fiscal-stimulus package and a program to reduce mortgage principals for troubled borrowers, both of which have been urged by President-elect Obama.
Even so, unemployment will linger above 9 percent through all of 2010, he said. Unemployment tends to stay high well after a recession is over because employers are slow to hire back.
"There's not a lot of good news in here," he said.
Michael said the Sacramento area figures to lose 2 percent of its jobs next year, a significant downturn. The region's sea of state workers could suffer some of the worst of it because of the state's budget crisis, he said.
Proposals for layoffs or unpaid furloughs have been floated by elected officials as one way of cutting the deficit.
The region's unemployment rate is 7.9 percent. The statewide rate is 8.2 percent.
One small plus for Sacramento is it faces relatively little exposure to job losses in manufacturing, a sector that typically gets hit hard in a recession.
The tech sector is also vulnerable, although Michael said the job losses in Silicon Valley will be just a fraction of what they were during the dot-com recession of 2001.
Michael said unemployment will likely rise into the teens in some Central Valley communities like Modesto and Merced, though it won't get quite as high as it did in the 1990s.
Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
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