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California’s Strong Job Growth Pre COVID-19 Better Positions State For Recovery

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CALIFORNIA’S STRONG JOB GROWTH PRE COVID-19 BETTER POSITIONS STATE FOR RECOVERY

March 27, 2020 — The latest employment figures released by the California EDD reiterate one piece of good news: California entered the COVID-19 crisis from a strong position. Together with federal stimulus and a return to some degree of normalcy within a couple of months, the economic hardship could be somewhat temporary, with consumption deferred to a later period, according to analysis released jointly by Beacon Economics and the UC Riverside School of Business Center for Economic Forecasting and Development. However, there could be longer-term hardship if this unprecedented draw down in consumption endures into the summer.

“We have taken a jump into unknown territory. Over the next few weeks, the number of workers laid off in California will reach unprecedented levels,” said Taner Osman, Research Manager at Beacon Economics and the UCR Center. “The hope is that stimulus measures will ease the short-term pain felt by workers, and that containment efforts will enable the economy to return to something like full capacity as the summer proceeds.  At present, we can take some comfort in the fact that the state’s economy entered this downturn from a position of unparalleled strength.”

The latest figures reveal that employment in the state grew by 29,000 jobs in February. Since February of last year, California has added 269,000 jobs, which is equivalent to a 1.6% year-over-year increase, matching the nation’s growth rate of 1.6%. The effect of COVID-19, however, does not register in the current job’s release and will not appear in the numbers in a meaningful way until data for April are available.

California’s unemployment rate held steady at 3.9% in February, maintaining its record low. The state’s labor force continues to expand, albeit slowly, growing by 6,400 February. Year-over-year growth in California’s labor force now stands at 0.7%. A lack of housing continues to be the main constraint for work force growth in the state.

Key Findings:

  • The Construction sector added more jobs in February than any other sector in the state’s economy, boosting payrolls by 7,800 positions. Since February 2019, the Construction sector grew payrolls by 2.8% over the 12-month period.
  • The Information sector also had a strong month, increasing payrolls by 6,400 in February. Other sectors posting strong gains in February were Professional, Scientific & Technical Services (5,500), Administrative Support (4,600), Health Care (3,600), and Finance & Insurance (2,700)
  • Over the twelve-month period from February 2019 to February 2020, the Transportation, Warehousing, and Utilities (4.9%), Information (4.2%), Educational Services (3.5%), Professional, Scientific, and Technical Services (2.9%), Health Care (2.8%), and Construction (2.8%) sectors posted the biggest job gains in percentage terms.
  • Within the state, job growth was led by Southern California. Los Angeles (MD) saw the biggest gains, where payrolls grew by 13,400 during the month. San Diego (4,600), the Inland Empire (4,300), and Orange County (2,600) also enjoyed job gains. Over the past year, El Centro (2.1%) saw the fastest job growth in the region, measured by percentage increase, followed by San Diego (1.9%), Los Angeles (MD) (1.7%), the Inland Empire (1.6%), Orange County (1.2%), and Ventura (0.9%).
  • In the San Francisco Bay Area, San Jose led the way, where payrolls expanded by 4,000 positions in February. San Francisco (MD) (3,200), the East Bay (200), and San Rafael (MD) (200) also saw payroll increases during the month. Over the past year, San Francisco (MD) (3.1%) experienced the fastest job growth rate in the region, followed by Napa (3.0%), San Rafael (MD) (2.1%), Santa Rosa (2.1%), and San Jose (1.7%).
  • In the Central Valley, Sacramento enjoyed the biggest monthly gains, where payrolls increased by 3,500 positions. Stockton (700), Bakersfield (600), Madera (300), and Modesto (300) added jobs as well. Over the past 12 months, Yuba (8.2%) experienced the fastest growth, followed by Madera (3.1%), Bakersfield (2.9%), Fresno (2.2%), Stockton, (2.1%), Modesto (1.9%), and Visalia (1.7%).
  • On the Central Coast, Santa Cruz added the greatest number of jobs, with payrolls growing by 1,000 over the month. Santa Barbara (900), Salinas (500), and San Luis Obispo (400) also increased payrolls during the month. From February 2019 to February 2020, San Luis Obispo (3.2%) added jobs at the fastest rate, followed by Santa Cruz (2.7%), Salinas (2.0%), and Santa Barbara (1.8%).

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Beacon Economics is an independent economic research and consulting firm based in Los Angeles. The UCR School of Business Center for Economic Forecasting and Development is the first world class university forecasting center in the Inland Empire. This analysis was authored by Christopher Thornberg, Taner Osman, and Brian Vanderplas. Learn more at www.beaconecon.com and www.ucreconomicforecast.org.

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Christopher Thornberg, PhD
Christopher Thornberg founded Beacon Economics LLC in 2006. Under his leadership the firm has become one of the most respected research organizations in California serving public and private sector clients across the United States. In 2015, Dr. Thornberg also became Director of the UC Riverside School of Business Center for Economic Forecasting and Development and an Adjunct Professor at the School. An expert in economic and revenue forecasting, regional economics, economic policy, and labor and real estate markets, Dr. Thornberg has consulted for private industry, cities, counties, and public agencies. He became nationally known for forecasting the subprime mortgage market crash that began in 2007, and was one of the few economists on record to predict the global economic recession that followed. Dr. Thornberg holds a Ph.D in Business Economics from The Anderson School at UCLA, and a B.S. degree in Business Administration from the State University of New York at Buffalo.