California has now had three consecutive months of job gains, and the State’s unemployment rate has been declining, albeit slowly. That’s an improvement, but it’s not time to break out the bubbly.
For one thing, those job gains have been pretty darn small, and they haven’t been enough to drive down the unemployment rate. Outmigration and a shrinking labor force are the reasons that California’s unemployment rate is declining.
We’ve also seen this picture before. Almost a year ago, we commenced five months of increasing jobs, and stronger growth than we are currently seeing. Then, the growth stopped. We saw three out of five months with declining jobs.
This is what data looks like when an economy is bouncing along the bottom. Long sustained periods of positive data, or negative data for that matter, just don’t happen. We get some good data, sometimes very good. Then some bad data comes along. The key is not to let the good data get you too excited, nor do you want to let the bad data depress you too much.
Absent a new recession, caused by, say, the collapse of the Eurozone or an oil supply interruption, California is in for a long slow recovery.
This reality is reflected in demographic data. Just last week, the Los Angeles Times had an article with the headline “Proportion of California’s transplant population reaches 100-year low.” People go where the opportunity is, and unfortunately, it isn’t in California these days.