Faint Sign of Economic Life Bubbles Up in California
COULD it be? Could it be that the wheezing California economy is finally showing some jump?
Don't bet your reservation at Spago restaurant on it.
But the big drop in the state's unemployment rate last month from 9.4 percent to 8.6 percent is the first faintly encouraging economic news here since the Dodgers were a contender. That's quite a while.
"It suggests that the decline in the number of jobs in the state economy is leveling out - and that we may, in fact, be adding jobs on a month-to-month basis," says Mark Green, an economist with Wells Fargo Bank in San Francisco.
Though no economist thinks the recession is over - indeed, some believe the April figure was just an aberration - the drop does at least give analysts something to talk about.
Until this point, looking for signs of new life in the California economy has resembled scanning the heavens for evidence of extraterrestrial intelligence.
"It certainly isn't bad news," says Robert Arnold, a senior economist with the Center for the Continuing Study of the California Economy in Palo Alto, Calif. "But you have to wait a while before you get excited. We just don't know yet."
April was the second month in a row that US Department of Labor reported a drop in California's jobless rate. The 8.6 percent figure, released last Friday, was the lowest since April of last year. Some 14 million people were at work in the state last month, a gain of 23,000 from March.
Even so, unemployment here remains well above the national average - which was unmoved at 7.0 percent in April - and among the highest of industrial states.
Yet some economists think the national jobless figure is far more telling for the state than the California number. While the Golden State is the world's seventh largest economy, it isn't an island.
"The important point is that the US economy is not turning around," says Mr. Arnold. "If the nation doesn't recover, don't expect California to."
Others caution that jobless statistics are volatile and subject to seasonal fluctuations. A single digit doesn't make a trend.
David Hensley, director of the business forecasting project at the University of California Los Angeles, notes that most other indicators - retail sales, real estate prices, help-wanted advertising - still show the state mired in a recession.
"I just don't think California has turned around to that point," he says. "Too many other things suggest that the state is still bumping along on the bottom."
While the jobless figure for Los Angeles County dipped from 10.4 percent to 9.4 percent last month, analysts say northern California continues to show more vitality than the southern part of the state.
Tourism is strong in San Francisco and the wine country, and northern California hasn't been as affected by defense cutbacks as Los Angeles and San Diego counties. Southern California has also had a bigger glut of commercial real estate.
"We are seeing the beginnings of strength in the northern half of the state and the Central Valley," says Ken Ackbarali, an economist at First Interstate Bancorp. "But the southern half is still quite weak."
He doesn't expect a statewide turnaround until next spring, at least. Others are similarly dour. Mr. Hensley says the budget crunch in Sacramento and in cities up and down the state could result in the loss of 28,000 government jobs this year.
For now, Wells Fargo is sticking with its forecast that the state will lose 100,000 jobs in 1993.
The April jobless figures, though, may hint that the biggest losses have already occurred and that, as Mr. Green puts it, "we are beginning to see an increase in the number of jobs on the margins."