California, L.A. May Be Facing a Slow Recovery
California’s sharp rise in unemployment in September provides fresh evidence that the state’s economic hangover is persisting and suggests that relief might not come until well into 1992, economists said Friday.
Last month’s increase in the state’s jobless figure to 7.7% from 7.3% reverses two months of improvement and occurred as the nation’s unemployment rate edged down slightly.
The outlook for Southern California is even more troublesome, as the unemployment rate in Los Angeles County climbed to 9.3% from 8.5%, the highest rate since July, 1984.
“California looks like it hasn’t hit its bottom yet,” said Arthur J. Shaw, economist for the Los Angeles Area Chamber of Commerce, “and Los Angeles looks like it’s on a steeper down slope than California. But neither of them has hit the level of pain that we saw in the last recession (in 1981-82).”
The problems in Southern California are most severe in aerospace, which has been hurt by defense cutbacks, and in real estate, retailing and financial services.
Economists expressed some caution in interpreting the unemployment numbers because state and local figures tend to be more volatile than the national statistics. Also, unemployment statistics tend to be a lagging economic indicator, improving only after a recovery has already taken hold.
But economists generally said that California jobless figures indicate the surprising depth of the recession gripping the state, and they predict that Southern California could feel its ill effects until mid-1992 or perhaps even into 1993.
The unemployment figures were issued a day after the Commission on State Finance reported a sharp drop in state tax collections for September and the loss of 240,000 jobs statewide during the current recession, almost seven times the number previously estimated.
“The nation is in the early stages of a modest recovery, but California’s economy remains locked in a recession,” said Mark Green, an economist with Wells Fargo in San Francisco.
Green noted that the state fell into the recession later than the rest of the nation and so is likely to climb out of the economic slump later. But, also, the state has unique problems that are holding it back, including a sluggish high-technology manufacturing sector, a slowdown in defense spending and higher living costs both for residents and businesses that operate in California.
“The state increase indicates the tough times in the economy,” said Jack Kyser, economist for the Economic Development Corp. of Los Angeles County. “There’s no strength on the horizon, and that’s rather frightening. For the last month, it was a rare week that you didn’t hear somebody talking about a firm doing a layoff or planning a layoff.”
Kyser, normally an optimistic forecaster, is so pessimistic now that he believes the local economy will not bounce back until 1993. He points to poor performance in manufacturing, particularly aerospace, as well as job losses in construction and retail trade as the chief reasons.
“It’s scary times,” he said. “It’s not just your typical recession for California and Southern California.”
In September, 1990, the jobless rate stood at 5.9% in California and 6.1% in Los Angeles County. But other major industrial states--including Michigan and Massachusetts--reported higher September unemployment rates than California.
For September, 1991, 1.153 million people were unemployed in the state, compared to 1.089 million in August and 870,000 a year ago.
Nearly every sector lost jobs in September, led by construction and manufacturing. Only services and government reported increases.
But the number of people employed in California increased to 13.853 million in September, compared to 13.796 million in August and 13.764 million in September, 1990.
“While the unemployment rate is up, the fact that employment increased for the fourth straight month is encouraging,” said Thomas P. Nagle, director of the state Employment Development Department.
Los Angeles resident Rosario Jacquez is not encouraged. Jacquez, who is supporting a daughter in high school, has been employed only sporadically since March, 1989. She is looking for work as an accounting or data entry clerk.
“I feel terrible,” Jacquez said. “I need to work, I need to work . . . . I had savings, but my savings are wiped out.
“I went to (employment) agencies and (there is) no work,” she said. “They said there are no jobs out there. I apply everywhere. The only answer I get is no.”
Anthony Davis, 31, has been living off of his retirement savings since being laid off more than a year ago by Intelligent Surgical Lasers, a small San Diego-based medical products company. The layoff has been particularly stressful because Davis moved to San Diego from New Jersey just two years ago--after being laid off by Allied-Signal.
Davis, a laser engineer and a part-time martial arts instructor, described his job search as “extremely hard physically . . . . It’s the hardest, most demanding job I’ve ever had. I wouldn’t wish this on my worst enemy.”
Aicha Lion of West Hollywood said she speaks fluent French, English and Spanish and knows how to operate some sophisticated computer software programs. But she has not been able to find a permanent job since she was laid off from her insurance billing job at UCLA Medical Center in July.
“I feel left out,” said Lion, 32. “I’ve worked all my life, and all of a sudden there’s no work for me. It’s been almost three months, and I don’t want to stay home any more.”
“I look in the paper. I look all over, and nobody’s hiring for permanent positions. And businesses don’t have temporary positions either. The economy is so bad, nobody wants to hire.”
Staff writers Lorna Fernandes and Julie Tamaki in Los Angeles and Greg Johnson in San Diego contributed to this story.
