State is years away from jobs recovery

Double-digit jobless rate expected through end of 2020, report shows

The California job market appears to be years away from a return to the lofty heights it enjoyed before the coronavirus unleashed wide-ranging economic woes, an unsettling forecast released Wednesday shows.

A grim new outlook from the closely watched UCLA Anderson Forecast suggests California’s pre-coronavirus economic boom won’t reappear for at least two years.

It was just a few months ago, from August 2019 through February of this year, that the jobless rate in California was at a record low 3.9 percent. Those heady days are long gone.

“A full recovery to pre-recession levels of economic activity is not expected until after 2022 in the state,” Leila Bengali, an economist with the UCLA Anderson Forecast, wrote in the report.

Although a noticeable improvement might emerge by the end of 2020 for California’s brutalized economy, the Anderson Forecasters made it clear that the return to the pre- coronavirus economy statewide is further away.

Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific, says he and other economists also believe a protracted rebound looms for California.

“Most forecasts are shifting to a longer recovery path for California,” Michael said.

Some signs have emerged to suggest that a springtime boom in job gains in California has faltered.

“We see the recovery slowing down in real-time in California,” Michael said.

Case in point: In June, California added a mammoth 551,400 jobs, which was well above the 148,900 jobs added in the Golden State in May. But those two months of robust gains were followed up by noticeably modest increases of 83,500 in July and 101,900 in August.

In February 2020, California reached a record high of 17.6 million non-farm payroll jobs, the

state Employment Development Department reported, but the current employment levels in California are far from that pinnacle.

At present — despite gains of 885,700 payroll jobs in May, June, July, and August, California had 1.73 million fewer jobs in August than it did in February, which was just before state and local government agencies imposed wide-ranging business shutdowns to battle the coronavirus.

Payroll employment in California is projected to reach 16.18 million by the end of 2020 and 16.97 million by the end of 2022, the Anderson Forecast predicted.

Put another way, by the end of 2022 — more than two years from now — job totals in California will still be 630,000 jobs below the record high of 17.6 million.

Similarly, the unemployment rate will chart a painfully sluggish path to full recovery, the Anderson economists predicted.

California’s jobless rate is projected to be 10.8% at the end of 2020, 8.6% at the end of 2021, and 6.6% at the end of 2022, according to the Anderson Forecast expectations. The forecast didn’t even say when — or if — California would return to a 3.9% jobless rate.

Ca lifor nia’s nag g ing problem in its job market is that the state’s pace of reopening from the coronavirus- linked business shutdowns appears to be too leisurely to allow some companies to survive long enough to resume business at anything approaching pre-pandemic levels.

A growing number of employers in the Bay Area and California have converted previous temporary furloughs to permanent layoffs.

“The prospects are growing for more permanent damage to small businesses,” Michael said. “That means it will take longer for California to recover and come back.”