California’s economy is recovering from its worst recession since the Great Depression – more or less.
The announcement that California had added 29,500 jobs in April and regained 1.9 million jobs since the Great Recession hit bottom five years ago fuels a sense that the Golden State has regained its luster.
Even California’s more skeptical economists, such as those at Cal Lutheran University, see the state prospering – and in some areas, booming loudly.
The more optimistic analysts, meanwhile, are downright giddy – at least as giddy as those in the dismal science can be.
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“The California economy will maintain strong growth despite soft U.S. economic growth and a deepening drought,” says the University of Pacific’s Eberhardt School of Business.
“Since February 2010, California has been the largest single source of new jobs in the U.S.,” says Beacon Economics, “accounting for 16.2 percent of all jobs created in the nation.”
The state’s unemployment rate will fall to 5 percent by 2017, says UCLA’s Anderson Forecast.
Taxes are pouring into the state treasury almost faster than they can be counted.
Gov. Jerry Brown’s revised budget ups revenue projections by $6.7 billion over what he had said just four months earlier, while the Legislature’s budget analyst, Mac Taylor, sees another $3.1 billion on top of Brown’s number.
So what’s not to like?
Brown is openly worried that California, which averages one economic boom and one bust a decade, could falter again soon.
While his budget assumes continued growth, “as we know, economic expansions do not last.” The current recovery, he continued, has already lasted a year longer than the historic average and “another recession is on the way – we just don’t know when.”
That concern is the basis for Brown’s insistence on packing away as much surplus revenue as possible into a rainy-day fund that would cushion the effect of a future downturn.
However, he shies away from the more fundamental remedy for revenue volatility, which would be to reform the state’s imbalanced, convoluted revenue system, not wanting to confront the issue’s difficult politics.
Meanwhile, the current boomlet is not quite as positive as it superficially appears from the unemployment and state revenue numbers.
It is driven largely by a high technology boom centered in the Bay Area, and the flood of taxes from high-income Californians indicates that those at the top are enjoying recovery most of all.
In other sectors, other regions and other economic classes, the recovery is mediocre. Jobless rates near or over 10 percent are still common in inland counties, topped by 21.2 percent in Imperial County.
California’s latest unemployment rate, 6.3 percent, is half of what it was in the depths of recession, but is still tied (with Georgia) for the nation’s 41st-highest rate.
More troublesome is the “U-6” rate calculated by the U.S. Bureau of Labor Statistics, counting not only the jobless but “marginally attached” workers and those working part time involuntarily.
California’s rate during the first quarter of this year was 14.7 percent, the nation’s second highest. Los Angeles County’s U-6 rate is even higher, 16.6 percent, demonstrating the recovery’s stark regional disparities.
It is, indeed, a mixed bag.