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State suffers third biggest monthly job loss since end of WWII
(Sacramento Bee, The (CA) Via Acquire Media NewsEdge) Jan. 24--Staggered by layoffs, store closings and other troubles, California's job market suffered through one of its worst months in history in December, pushing unemployment to 9.3 percent.
Some 78,200 jobs disappeared statewide, the Employment Development Department said Friday, as the recession swamped practically every sector of the economy: retailing, construction, manufacturing and more. It was the third biggest monthly job loss since the end of World War II, and the largest since the dot-com collapse wiped out 85,100 jobs in July 2001.
Statewide unemployment jumped nine-tenths of a point, the largest one-month leap in at least 33 years, said chief economist Howard Roth of the California Department of Finance. At 9.3 percent, unemployment is the highest it's been since 1994.
The numbers were poorer than most economists expected -- and reinforced fears that even worse news is coming. Empty storefronts are multiplying, the tech sector is hurting, and construction continues to struggle. State government workers are facing furloughs and layoffs starting Feb. 6, although that could be forestalled by litigation or other factors.
"What we're looking at now is a recession that's getting stronger," Roth said. "We're probably going to see bad numbers predominantly for a while."
Greater Sacramento's unemployment rose six-tenths of a point to 8.7 percent, the highest since 1993. Some 4,700 jobs vanished across the four-county region, with major losses recorded in construction, finance and the wide-ranging sector known as professional and business services.
The Sacramento economy is so weak that area retailers added just 200 jobs in December. That's about one-tenth the usual number, said EDD labor market consultant Diane Patterson.
The anemic hiring was in line with one of the poorest holiday shopping seasons in decades. The month ended with the demise of Mervyns, erasing hundreds of jobs in Sacramento, and now Circuit City Stores is in liquidation, too. Fresno-based Gottschalks Inc. is fighting for survival in bankruptcy court.
In raw numbers, retailers added a mere 7,500 jobs across the state in December. Adjusted for seasonal expectations, as is customary with statewide numbers, retail employment fell by 21,600.
Technology is getting hit, too. Sacramento's fledgling green-tech sector just endured the loss of 105 jobs at OptiSolar Inc., a solar-energy company at McClellan Park. Xyratex Ltd., a data-storage company, plans to eliminate 300 jobs in West Sacramento in February, according to layoff notices filed with the state.
"There's nothing; the economy is too slow," said Herminio Ortiz, 47, a construction worker who was at EDD's main unemployment office in Sacramento earlier this week.
Sitting nearby, 51-year-old Harry Albino, who lost his job repairing medical equipment, said he's pessimistic about a quick economic recovery.
"It's going to take a couple of years -- to get back on our feet," he said.
But former EDD director Mike Bernick, a senior fellow at the Milken Institute think tank in Santa Monica, said it's possible the recovery could be robust. That's because economic trends are more dynamic than before. Employers are imposing layoffs more quickly than in previous downturns; they might hire back just as quickly, he said.
Still, Gov. Arnold Schwarzenegger renewed his demand that a stimulus package be included in any resolution to the state's budget crisis. Democrats, who control the Legislature, have resisted Schwarzenegger's plan, which includes a relaxation of environmental regulation.
"We cannot solve our fiscal problems without working to stimulate our economy," the Republican governor said in a press release.
A new counting method probably worsened the gloom in the jobs report. The old system was often slow to capture dramatic swings in the economy; the new system is designed to capture those trends more quickly, said Steve Saxton, chief of EDD's labor market information division.
The new method also prompted EDD to revise November's job numbers. Instead of losing 41,700 jobs, it's now estimated the state lost 73,500 jobs. That was the fourth-highest job loss ever, ranking just behind the December numbers announced Friday.
Roth said California's single worst month for job loss on record came in December 1945, when the uncertain transition to a peacetime economy wiped out 108,700 jobs.
The population was much smaller then, and the loss came to nearly 4 percent of all jobs. The losses announced Friday totaled about one-half of 1 percent.
But there was no mistaking how bad the report was.
"This decline is really stunning," said Jeff Michael, director of business forecasting at the University of the Pacific.
The report showed misery spreading up and down the state, with unemployment hitting 22.6 percent in Imperial County and 14 percent in Siskiyou. Double-digit unemployment has returned to Fresno, Merced and other portions of the Central Valley.
Economists were forced to rethink earlier projections. Just a week ago, Suzanne O'Keefe of California State University, Sacramento, told a Sacramento audience that job growth could return to the region in September. Now she says she hopes the job market will merely stabilize by year's end.
"Things are getting worse, month by month by month," she said Friday.
The much-watched UCLA Anderson forecast had predicted that statewide unemployment would peak at 8.9 percent -- a prognosis that's now been reduced to shambles.
UCLA economist Jerry Nickelsburg said Friday he wasn't shocked that unemployment surpassed his prediction, but "I guess I didn't expect it quite this soon."
His new prediction: "The mid-nines will not be a surprise, even a bit higher than that."
December was worse than predicted because of the collapse in retail spending and the downturn in commercial construction, which felt the effect of the credit squeeze, he said. Also, a weakened global economy curtailed the market for California's once-booming export industry, he said.
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Call The Bee's Dale Kasler at (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.
Copyright (c) 2009, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services.
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