The layoffs tapered off in July and the economy seems poised for recovery.
Except in California.
Wall Street and the White House celebrated a relatively upbeat national unemployment report Friday, marked by lower-than-expected job losses in July and an actual dip in the unemployment rate.
But there was little joy in California, where the job loss has been relentless and where economists said the state is likely to lag behind the nation when the upturn gets under way.
One reason is the astonishing depth of California's real estate slump. Though the market is starting to improve, it's done so much damage to construction, consumer spending and other key sectors that recovery will come slowly.
Another reason is the huge drop-off in international trade, which is punishing California's ports. And, for good measure, the state's worst-in-the-nation budget problems will prolong the recession here.
"In California right now, it's really hard to see any areas of strength," said Sung Won Sohn, economist at California State University's Channel Islands campus in Camarillo. "It's hard to be optimistic."
On the national level, there was talk Friday that the recovery might already be under way. The U.S. Labor Department said the economy lost 247,000 jobs last month, the smallest loss since last August and below the private forecasts of 320,000. The unemployment rate fell a tenth of a point, to 9.4 percent, the first decline since April 2008. Previously reported job losses for May and June were revised downward.
Some private forecasters, including Barclays Capital Research and RDQ Economics in New York, declared the recession had probably ended. Sohn called it the "dawn of an economic recovery."
A more cautious President Barack Obama told reporters in Washington: "The worst may be behind us. Today we're pointed in the right direction."
The stock market continued its rally, with the Dow Jones average climbing 113.81 points to 9,370.07.
Yet most observers believe there's still some pain ahead. The national unemployment rate is likely to climb some more, even if the economy starts growing soon, because employers typically don't hire until they're convinced a recovery is for real.
California economists thought they saw rays of sunshine this spring. The monthly statewide job losses fell from 100,000-plus to a more palatable 60,000 or so.
But since then there's been no further improvement. The California job losses in June, at 66,500, were slightly worse than in May, driving unemployment to 11.6 percent. Sacramento's unemployment rate also came in at 11.6 percent, more than two points higher than the national average.
Most economists believe unemployment will rise over the next several months in California. A recent forecast from California State University, Sacramento, said the region's unemployment will go to 13.5 percent next year.
The state and local unemployment figures for July will be released Aug. 21.
So far, California has been losing jobs at a faster clip than the nation, said Howard Roth, chief economist at the state Department of Finance. Since the official onset of the recession in December 2007, the state has lost 6 percent of its payroll jobs, he said. The nation has lost 4.6 percent.
He said the collapse of California's housing market is a key reason why the state is in such relatively poor shape.
"Our real estate bubble was bigger," he said.
Sohn said California's heavy dependence on international trade has also hurt. California exports have fallen about 25 percent from last year, according to data compiled by Sacramento trade consultant Jock O'Connell.
Experts said the recent spark in the housing market provides some cheer but not much. Yes, sales of existing homes are up sharply, and home-building activity was higher in June than in May. But housing starts in the Sacramento area, for instance, were still down 49 percent through the first six months of 2009 compared with a year ago, according to the California Building Industry Association.
"We're not yet seeing any substantial growth in residential construction," said Jerry Nickelsburg, an economist at UCLA. A genuine upturn isn't likely until later this year, he said.
And the economy's problems now go well beyond housing. The retail sector, among others, has been devastated - and won't fully recover any time soon. Kohl's recently announced it will hire 600 workers in greater Sacramento next month. Encouraging, to be sure, but a pittance compared to the more than 7,000 retail jobs that have disappeared in Sacramento in the past year.
A similar dynamic shows up elsewhere. Because of the global downturn in spending on computers and electronics equipment, Silicon Valley has lost twice as many factory jobs in the past year as it has construction jobs, according to the Employment Development Department.
Nickelsburg said California will get a definite boost from billions of dollars in spending on things like road and bridge repairs, courtesy of the federal stimulus plan and the state's voter-approved infrastructure bonds.
But he said the state government's budget problems will offset some of the gains. State furloughs alone will reduce worker pay about 14 percent, erasing roughly a half-billion dollars from the Sacramento economy through next June, according to a Bee estimate.
