On Friday, the state Employment Development Department reported that the unemployment rate stands still at 7.7% and 11600 non farm jobs have been cut by the California employers.
According to economists, these reports don’t show the effect of the recent global banking crisis, as they are concerned only with the first half of September.Ross DeVol, an economist with the Milken Institute in Santa Monica said “We’re not going to know the impact of the financial panic on the California economy until we see the October unemployment numbers.” “The California economy has entered a period of recession”, commented Stephen Levy, who works with the Center for the Continuing Study of the California Economy in Palo.
“Spending cutbacks will likely continue well into next year and the state’s unemployment rate will top 8 percent and possibly reach 9 percent,” he said after emphasizing on the fact that job losses will continue, credit will be tighter and home and/or stock prices will decline. Thus, the economy will only sink.
Another report by Reuters/Michigan Consumer Sentiment Index said that 9 amongst every 10 consumers consider the nation in a state of recession and two third believe that the unemployment rate can go only higher in 2009. It is clear that housing and the related sectors are suffering the most. Apart from a decline in construction payroll, trade and transport also have a decline in payroll jobs. Though in some sectors like leisure and hospitality, the payroll has expanded, but on the whole economy is unstable. There has been a 39% increase in job seekers as compared to September, last year.