SAN FRANCISCO — The state of California, with the nation’s largest economy and retail market, is gradually recovering from the recession, although its on-again-off-again improvement is expected to continue to lag the rest of the country.
The state is still hampered by high unemployment, which in July increased to 12 percent against June’s 11.8 percent, and was up 12.4 percent from July 2010, according to seasonally adjusted state data released last week.
With the second-highest jobless rate in the nation next to Nevada’s 12.9 percent, California contrasts with the national rate of 9.1 percent.
The state’s recovery “looks like it will be slower than we had hoped for and beyond that it’s anyone’s guess,” said Stephen Levy, senior economist with the Center for Continuing Study of the California Economy.
Related Articles
The economy also varies from region to region, with coastal metro areas such as San Francisco, San Diego and Los Angeles showing relative strength in professional employment. Still, consumers largely remain on their guard, focusing on increasing savings and reducing debt, Levy said.
You May Also Like
Employment among California’s clothing and accessory stores is showing slight improvement, up 3 percent in July to 168,000 jobs against June, and posting a 1.8 percent gain from a year earlier, on a seasonally unadjusted basis. However, jobs at department stores declined by less than 1 percent for the month to 201,400 workers, which is also a less-than 1 percent dip from a year ago.
Potentially encouraging for fashion retailers is the outlook for increases in state taxable retail sales, a key economic barometer. For the fiscal year 2010-2011, they are forecast to rise 6.5 percent and gain 7.2 percent for 2011-2012, according to the Kyser Center for Economic Research.
In contrast, during 2009-2010, taxable retail sales gained 6.6 percent, after declining 12.9 percent in 2008-2009 and dropping 7.7 percent during the 2007-2008 fiscal year.
Additionally, the center forecasts personal incomes in the state will gain 4.6 percent this year, against a 2.7 percent increase for 2010 and a 2.4 percent decline in 2009.
Despite such gains, Nancy Sidhu, chief economist with the Kyser Center, characterized California’s economic recovery as “moderate,” with her main measure being employment, the improvement of which she’s unwilling to project.
Sidhu said the state jobs numbers should continue to waver. “This recovery is just not there,” she said, noting how “the margin between the U.S. and California rates is unusually high.”
For 2011, the California Department of Finance projects the jobless rate will be 12.1 percent, declining in 2012 to 10.8 percent.
“Normally, within as much as a year [from] an end of a recession, you may have recouped the jobs you’ve lost,” said Dennis Meyers, economist with the department. “In this one, we’re looking at a few years.”
Among hurdles facing the economy are financial woes of state and municipal governments that are dampening hiring. “That is normally where we see stability,” Meyers said. “It is taking a lot of steam out of a typical recovery.”
Reflecting the current state of consumer spending in the region, the Federal Reserve’s latest snapshot of California and other western state economies found “mixed” results at retail, according to the Beige Book released at the end of July. “Sales were largely flat for discount chains, while traditional department stores, particularly those catering to the luxury segment of the market, noted ongoing sales gains,” according to the report.