Down So Long Looks Like Up? : Maybe, but UCLA forecast surely is welcome
Is that really good news we’re seeing or are we just glad not to be seeing so much bad news?
The newest data indicates California is in a recovery mode, so for a moment forget everything you may have heard to the contrary. Although the comeback is slow and uneven in such categories as employment, the UCLA Business Forecasting Project points to a net increase of 111,000 jobs by year’s end. Maybe that’s not the second coming of prosperity but the UCLA forecast is a surprising reversal from the June report, which predicted a 0.1% drop in employment for the year.
Even with the aerospace layoffs expected from the Martin Marietta-Lockheed merger and Hughes Aircraft’s virtual shutdown of its Fullerton complex, California will “not go back into recession,” according to UCLA.
Now that, we submit, is something.
Not all parts of the state are experiencing improvement. There are good developments in Orange County, where the unemployment rate dropped to 5.9% in August from 6.6% the month before.
Los Angeles County, alas, is not expected to have job growth until at least 1995.
In general, the northern and central parts of California are faring better than the south. Still, California’s overall unemployment rate is expected to fall from about 9%--which is nearly three percentage points above the national rate--to 7% in 1997 because of new jobs and slower growth in the labor force.
Much of the state’s renewed vibrancy will come from small entrepreneurial businesses. The cost of doing business here is still too high and efforts to reduce expenses and cut red tape must continue. In this regard, a little relief is in sight. The California Department of Insurance is enacting its biggest reduction ever in workers’ compensation rates, slashing by 16% the base premiums paid by businesses to insure their employees against on-the-job injuries. The reduction is expected to create a one-time savings of about $800 million for thousands of California employers who purchase workers’ compensation coverage. The rate cut--the third in 15 months--stems from a big drop in worker injury claims since long-awaited reforms of workers’ comp became law.
And that too, we submit, is not nothing.
True, structural changes in aerospace and other California industries will continue to slow the state’s recovery. The road back will be bumpy, because the wave of downsizing in large companies, utilities and financial institutions is not over.
And new uncertainties loom: jittery financial markets, the prospect of another interest rate hike by the Federal Reserve Board and a slowing national economy.
So it not surprising that Californians do not feel secure in the idea that things are becoming better. But it seems like this time, at long last, things really are looking up.
