All Posts Tagged: unemployment

California Economic Outlook Report – December 2020

Scott Anderson
Chief Economist

EXECUTIVE SUMMARY

California’s labor market recovery is lagging the nation as job losses in pandemic impacted industries remain high and new business restrictions and stay at home orders begin to bite.

After six consecutive months of job increases through October, employment in California is still 8.4% or 1.47 million jobs below the February peak.

California employment is forecast to decrease 7.1% in 2020 and rebound 1.5% in 2021.

California’s economic downturn would have been much worse without the unprecedented fiscal support from federal and state governments and aggressive monetary action from the Federal Reserve that helped loosen financial conditions and keep California consumers and businesses solvent despite unprecedented sales declines and job loss.

We assume additional substantial fiscal support from the Federal government will be needed and delivered by Congress in late 2020 and/or early 2021 to achieve this modest job growth across the state of California in 2021.

California’s unemployment rate declined to 9.3% in October from 16.4% in May, but remains the fourth highest among states in the nation. Further declines in California’s unemployment rate in 2021 will come much slower than they did this year. The state’s unemployment rate is expected to remain elevated and average 10.2% in 2020 and 8.9% next year, well above the U.S. unemployment rate of 8.1% in 2020 and 6.6% in 2021.

Solid housing demand, record low mortgage rates, and slim new and existing home inventories have turbo charged California’s housing market recovery since the spring decline with existing home sales increasing 19.9% from a year earlier in October. Housing starts are forecast to increase a solid 12.2% in 2021 on firming demand as the pandemic wanes and job growth returns.

California home prices are forecast to rise a robust 10.4% this year – primarily due to a shortage of homes for sale – and moderate to 6.1% in 2021 and 4.0% in 2020 as homebuilders respond to stronger demand by putting up more homes to alleviate the inventory shortfall.

To learn more, check out the California Economic Outlook December 2020.

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Another Better Than Expected Jobs Report For October

Scott Anderson
Chief Economist

The U.S. labor market recovery continued in October at a fairly rapid clip, though the pace of net job creation slowed for the fourth consecutive month to a gain of 638k jobs down from a 672k gain in September.

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Consumers Keep Spending Going Into The Holidays

Scott Anderson
Chief Economist

The September consumer spending and income report exceeded economists’ forecasts again.

In real terms, consumer spending increased at a robust 15.9% annualized pace in September, nearly ensuring consumers will continue to increase their spending at a healthy pace over the holidays too. Durable goods spending is up 14.3% from a year ago even as personal services spending has declined 6.5% from a year ago.

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Deteriorating Fundamentals vs. Rising Expectations

Scott Anderson
Chief Economist

Over the near-term, U.S. economic growth fundamentals look set to deteriorate. Yet U.S. stock prices remain close to record highs and long-term Treasury yields have moved up 10 to 15 basis points in the last week alone on prospects for sizable fiscal stimulus and a new Democratic administration. The markets are clearly trying to look past near-term signs of trouble, while focusing on a brighter 2021. 

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September Employment Lands Short of the Mark

Scott Anderson
Chief Economist

The September jobs reports brought more troubling signs that the labor market rebound that began in earnest in May as furloughed workers returned to work and peaked in June with a one month 4.78 million job gain is rapidly petering out as winter approaches.  

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