California unemployment rate reaches 10.1%

By Marc Lifsher

Feb. 28, 2009 12 AM PT

SACRAMENTO — Lackluster spending on clothes, cars, legal services and most everything else has left California’s economy listless, just about guaranteeing that the state’s 10.1% unemployment in January will march upward until at least the end of the year, economists predicted.

The Golden State lost 79,300 payroll jobs in January, pushing the monthly unemployment rate to its highest level since June 1983, when the country was starting to recover from a deep recession.

Job losses in January escalated across all industries -- including, notably, motion picture and sound recording -- with the state’s unemployment rate jumping 1.4 percentage points from a revised 8.7% for December.

Unfortunately, California still is falling into what appears to be a crippling downturn, said Howard Roth, chief economist at the state Department of Finance.

“There’s very little demand out there,” he said. “Certainly consumers are depressed, and businesses aren’t going to buy as long as consumers aren’t buying.”

The stagnation was even more pervasive in Los Angeles County, where unemployment rose from 9.2% in December to 10.5%, almost twice the rate recorded in January 2008.

All areas of the local economy declined in January compared with the previous month, with motion picture and sound recording losing 22,300 jobs, retail trade 15,100, educational and health services 7,000 and leisure and hospitality 4,100.

Layoffs by large California employers, which must be reported to government agencies, accounted for nearly 1 out of every 4 so-called mass layoffs nationwide, the U.S. Department of Labor said this week.

According to state filings, the layoffs affected all areas of the economy. Financial giant JPMorgan Chase listed more than 1,000 at locations in both Northern and Southern California.

No one is safe, said Esther Surjanto, who last month lost her job as an order clerk at a Los Angeles garment plant.

“We have no time to pity party,” she said. “Even the big, dream companies where you’d like to work are laying people off.”

“California is hemorrhaging faster than the U.S. economy,” said Sung Won Sohn, an economist at Cal State Channel Islands. California consistently has ranked among a handful of states with the country’s highest unemployment.

The jobs picture here is likely to keep deteriorating because the state no longer can assume that education and health services will generate new jobs, Sohn warned. “Given the budget crisis we’re having, I don’t think we can count on government to prop up the economy either,”

New data on the national economy’s performance, also released Friday, affirmed Sohn’s grim assessment. The Commerce Department reported that the economy contracted at an annualized rate of 6.2% in the last quarter of 2008, the most severe slowdown in 26 years.

“The road to full economic recovery will not be short,” Gov. Arnold Schwarzenegger cautioned. He said the state was counting on President Obama’s stimulus package and more modest efforts on the state level to set the stage for new job growth.

But at least some of the positive effect of the $787-billion stimulus program could be lost to California now that the state has raised taxes by $12.5 billion as part of a deal to close a $441-billion budget deficit, economist Esmael Adibi of Chapman University in Orange said.

“I don’t expect as much stimulus as there could have been,” he said. “After the budget passed, I became more pessimistic about the outlook for job creation here.”

Although stimulus spending on highways, levees and other public works could eventually lead to more hiring, the economy here won’t begin to turn around until “housing finds its bottom,” said Russ DeVol, director of regional economics for the Milken Institute in Santa Monica. The odds of that happening this year diminish with each onslaught of bad news, he said.

The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol said.

Times staff writer Nathan Olivarez-Giles contributed to this report.

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