The last time California’s unemployment rates were this low, George W. Bush was president and the recession hadn’t begun.
Unemployment last month dropped to its lowest point in nine years, both statewide and in greater Sacramento, state officials said Friday. The figures suggested California’s recovery is continuing to move forward despite signs of a slowdown on the national level.
California’s jobless rate dropped a tenth of a percentage point in May, to 5.2 percent, the Employment Development Department reported. In the four-county Sacramento region, the rate fell four-tenths of a point, to 4.7 percent.
Both rates are the lowest since May 2007, seven months before the recession officially started.
The news wasn’t all rosy, however. Employers added just 15,200 payroll jobs across the state last month, considerably fewer than the 70,000 jobs created in April.
The statistics are reflective of a story that’s been familiar to Californians for several years: The state is in the midst of a steady but unspectacular economic recovery that hasn’t fully made up the losses suffered during the recession.
“It’s an expansion, it’s not a boom,” said economist Jeff Michael of the University of the Pacific. “There’s still a ways to go in terms of incomes and getting back to where things were.”
That’s particularly true in Sacramento, he said, where wage increases and growth in high-paying jobs have only recently begun to take hold. Sacramento was the last major metro area in California to recover all of the jobs lost in the recession.
Yet the economy’s less-than-stellar performance, both in Sacramento and across the state, has been a blessing in some respects even though it’s been frustrating to job seekers. Michael said the recovery “feels a little more sustainable” than the rapid run-up of a decade ago, which was fueled primarily by a housing market that crashed spectacularly.
4.7 percent Unemployment rate in Sacramento region in May
How long the recovery will last is unclear. Some warnings popped up in the latest unemployment numbers, particularly the drop-off in new payroll jobs created. Most analysts say the payroll statistics are more reliable than the unemployment rates, which are calculated from a smaller survey.
“California employment gains have begun to decelerate,” said Sung Won Sohn, economist at California State University, Channel Islands.
Jason Sisney, chief deputy at the state Legislative Analyst’s Office, said job growth in California averaged 40,250 a month last year. So far this year, the monthly average has fallen to 26,600.
While the payroll figures tend to jump around from month to month, and are subject to revision, the May numbers dovetail with cautionary signs emerging nationally and internationally. California’s exports have faltered in the past few months because of economic slowdowns in Asia and other key markets. State tax revenue has fallen short of expectations lately, although the shortfall could be more a result of stock market instability than fundamental weaknesses in the California economy.
“Things don’t last forever,” Gov. Jerry Brown told lawmakers last month, urging caution in crafting the new state budget.
Michael said the drop-off in state tax revenue could be especially worrisome in Sacramento. “We’re still a government town, and the state’s got a volatile revenue structure,” said Michael, director of UOP’s Center for Business and Policy Research. One out of every four Sacramentans works in the public sector.
Nonetheless, Michael said he doesn’t forecast a downturn in the Sacramento area anytime soon. One positive sign: Although much of May’s job growth was concentrated in the construction industry, the region by and large has enjoyed a long stretch of economic growth despite a relatively paltry contribution from real estate and related industries.
“You can see room for further expansion,” Michael said.
May 2007 Last time state and local jobless rates were this low
He said he’s encouraged by reports that Sacramento or Tracy could land a major electric vehicle assembly plant. Even if the project doesn’t materialize, the mere possibility shows the economy is still strengthening.
“You are seeing more reports like that,” he said. “There’s activity out there, there are more prospects.”
In the past year, the region has added 18,100 jobs, a gain of 2 percent. That’s ahead of the U.S. average but substantially behind the state’s job growth rate of 2.8 percent. Since May 2015, the state has added 440,300 jobs.
Strong job growth has been recorded in practically all corners of the state: Fresno County and the Stockton area have each added 9,600 jobs in the past year, San Diego County has added 33,800 jobs, and Orange County has added 53,500, according to figures compiled by Palo Alto economic consultant Stephen Levy.
For all of that, the key region to watch is the Bay Area, whose high-tech sector has accounted for an outsized share of California’s job gains since the recovery began. Economic troubles in China and Europe have prompted some experts to say the latest tech boom could falter in the foreseeable future.
For now, the job creation machine appears to be in good shape: Unemployment fell to 3.4 percent in Silicon Valley and a microscopic 2.8 percent in San Francisco last month.
“We’re not seeing a bursting of any bubble, yet,” Sisney said.