Does Gavin Newsom exaggerate California’s economic health? Here are facts he doesn’t discuss
Gov. Gavin Newsom likes to tout what he calls the strong, vibrant California economy. He doesn’t mention the less flattering statistics.
The governor cited in a March 25 statement the latest state unemployment report, which showed the jobless rate sinking to 5.4% in February as 138,100 new jobs were created.
“These latest numbers show that California is continuing to drive our nation’s job growth,” Newsom said.
The governor’s statements are accurate and linked to state and federal jobs reports compiled by nonpartisan agencies.
What Newsom did not say was that California’s February unemployment rate tied for the second highest in the nation, well above the 3.8% U.S. average.
He didn’t say that an estimated 50,000 people in the state were laid off or fired from their jobs in January, the highest number in the nation.
Nor did he cite statistics showing California is 92% “back to normal,’’ according to a comprehensive yardstick of 37 indicators compiled by Moody’s Analytics and CNN Business to track the economic recovery.
California ranks 39th. The U.S. average this week is 95%. Texas is at 101% and Florida, 99.6%.
Of course, said Newsom spokesman Alex Stack, 92% “just means we have more room to grow.”
The index and other numbers are why economists are proceeding with more caution than Newsom as they discuss the California economy.
It has grown more quickly than the nation’s, and should continue to do so, said Alexander Specht, associate economist at the Los Angeles Economic Development Corporation’s Institute for Applied Economics.
Calilfornia’s growing, shaky economy
But Specht and other economists warned of at least two factors that could slow growth.
Among the most ominous: Labor shortages persist, and prices nationally in February were up 7.9%, their steepest pace in 40 years.
California’s gasoline prices continue to be far higher than any other state’s. Its $5.84 per gallon average Tuesday was 61 cents higher than runnerup Hawaii.
Michael Bernick called inflation “the main threat to ongoing employment growth in California,” and saw no clear path to easing the price spikes anytime soon. Bernick, a former California Employment Development Department director, is now an employment attorney at Duane Morris LLP.
The labor problem involves difficulty getting people to want to work. “Right now one big issue with California’s economy revolves around the labor force,” said Specht.
“While the state has been posting impressive job gains, businesses still cite issues hiring workers for open positions,” he said.
As a result, “It is unlikely these job gains will continue at anywhere near this month’s rate,” said Bernick.
Among the numbers Newsom cited to tout the state’s progress is how California has averaged monthly job gains 12 of the past 13 months.
Twenty percent of regained jobs nationwide were in California, and the state has regained 87.2% of the jobs lost in March and April 2020, when the pandemic triggered an historic economic collapse.
California’s lost jobs
But here are some of the more sobering numbers:
▪ Unemployment claims. California had 22% of the nation’s unemployment claims during the week ending March 26, a percentage that’s been consistent for some time, even though the state has 11.7% of the nation’s workforce.
Stack explained that part of the reason for the numbers involves California’s tourism-dependent sector, which continues to lag because of slow international travel, particularly from Asian nations with strict COVID-19 protocols.
▪ Unemployment rate. The 5.4% rate for February trailed only New Mexico and tied Alaska. Stack said that California’s unemployment rate tends to be higher than the nation’s for structural reasons, such as the seasonal nature of its tourism and agricultural industries.
▪ Layoffs and discharges. California had the largest increase in the country in this category in January, the latest data available, as 50,000 people were fired or otherwise involuntarily left their jobs, according to the federal Bureau of Labor Statistics. Only seven other states had increases in this area last month.
Stack noted that the California layoff rate was only 0.1 percentage point higher than the national average, tied with 11 other states for 18th highest layoff rate.
▪ Quitting jobs. The “quit rate,” or the percentage of people voluntarily leaving their jobs, was up in three states in January: California, Hawaii and New Jersey.
Stack cited another way of looking at the rate, pointing out it was slightly lower than the national average..
▪ Job openings. The number of job openings in California in January declined more than any state in the nation. California reported a decrease of 103,000 job openings during the month.
This story was originally published April 7, 2022 at 5:00 AM.
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