California Recession Toll Put at 552,700 Jobs : Slump: New figures show employment decline not as bad as believed. Over-counting of work force is blamed for error.
In a report many analysts viewed skeptically, state officials Tuesday released revised figures showing that California has lost 552,700 jobs, or 4.4% of its non-agricultural employment, since the recession began pounding the state in mid-1990.
By some gauges, the new figures reflect the state’s worst slump since the Depression. But they also tone down earlier appraisals of California’s economic ills, which had put the three-year employment decline in the range of 800,000 to 900,000 jobs.
The revision stems from an annual audit of employment statistics performed by the California Employment Development Department under the direction of the U.S. Bureau of Labor Statistics.
Labor market analysts said they had not realized until recently that they inadvertently over-counted workers throughout the nation, and particularly in California, for a decade. Consequently, when their data-gathering system was improved in 1991, they did not recognize that a large part of the drop in their job totals was due to past counting mistakes rather than the recession.
The new figures for California, released on a preliminary basis last week, reflect an effort by EDD and BLS officials to set the record straight. Still, many private analysts questioned the accuracy of the new data. They said that other economic indicators--such as wages, retail sales and construction--roughly square with the earlier job loss estimates.
“It doesn’t make sense to me at all,” said Joseph A. Wahed, chief economist with Wells Fargo Bank in San Francisco.
To economic analysts, the flap reflects a disagreement over the official interpretation of a major chapter in California’s economic history. To some, who for several years had based their forecasts on the old numbers, it also may be a professional embarrassment.
Economists, news organizations and policy makers “all look kind of foolish,” said David Hensley, director of the UCLA Business Forecasting Project.
Still, not all private analysts were ready to dismiss the revised government figures.
Stephen Levy, director of the Palo Alto-based Center for the Continuing Study of the California Economy, said he had not yet reviewed the new figures and was reserving judgment. He said if the new figures eventually are widely accepted, they could influence policy-makers, lawmakers, executives and consumers.
“People have changed their expectations and quantitative projections for the future because they thought the recent experience was so severe,” Levy said. “Well, what if it was only half as bad?”
Even as revised, however, the figures paint a grim picture of the California economy since July, 1990, when employment peaked at 12,541,700. While the growing U.S. economy has recovered the jobs that were lost in the nationwide recession officially declared ended in March, 1991, employment in California continues to fall.
