California to see record unemployment rise further

SAN FRANCISCO Thu Aug 6, 2009 2:51pm EDT

Juan Berber, 37, looks for a job in sales or customer service at the Goodwill Job Center in Los Angeles January 27, 2009. REUTERS/Lucy Nicholson

Juan Berber, 37, looks for a job in sales or customer service at the Goodwill Job Center in Los Angeles January 27, 2009.

Credit: Reuters/Lucy Nicholson

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SAN FRANCISCO (Reuters) - Signe Galvez-Samreuang has been out of work and looking for a job for more than a year.

Sarah Gilson is a part-time lawyer, part-time dog walker.

After six months of looking for work, Amy Gorman in March landed a full-time job selling solar-power systems.

All hope California's job market will improve, but consumers may thwart them. Record, double-digit unemployment will head even higher in the Golden State, some analysts say, as households save more, put spending on hold -- and force shops and restaurants near the end of their resources to close for good.

California's economy, the world's eighth largest, could see a jobless rate near a stunning 13 percent next year -- a level associated more with Rust Belt states, not the home of Hollywood and Silicon Valley.

Galvez-Samreuang is anxious. The 36-year-old Oakland, California, woman used to work as an interior designer for commercial properties. She has put career goals on hold until real estate recovers and now simply wants a job.

"I used to worry about where I was going and the next big step. Now it's, 'I'll take just about anything,'" she said.

More than 2 million Californians out of work amid the worst recession since the Great Depression are likewise scrambling for work as employers shed jobs left and right.

The state's unemployment rate stood at 11.6 percent in June, a record high since modern measures of joblessness began and well ahead of the month's 9.5 percent national average.

Analysts expect it to remain in double-digits for the foreseeable future with so many of the state's economic engines -- home building, finance, high technology -- idling.

They also see a sharp rise in the rate through the end of this year because consumers paring their spending are about to send a wave of job losses across California's retail sector.

"We think it will peak at 12.8 percent in the first quarter of 2010 and it will remain high," said Brad Kemp, director of regional research at Beacon Economics in Los Angeles. "You won't see single-digit unemployment rates in California until 2012."

LEAN HOUSEHOLD BUDGETS

Californians with secure, full-time jobs are also pinching pennies. The results have been shuttered storefronts, deep discounts at malls and falling sales tax revenues that along with other weak revenues, notably from personal income taxes, have forced California's state government to impose billions upon billions of dollars in spending cuts for public services.

Kemp said his economic consulting firm does not expect California's economy to resume significant job creation until its consumers feel confident enough to part with money they are holding in reserve because of job insecurity.

"It's the consumer who ultimately will determine when we get out of this," Kemp said, noting he expects a tipping point for skittish shoppers when the U.S. personal savings rate tops 9 percent, compared with 4.6 percent in June.

Gilson graduated from law school last year and looked for openings at San Francisco law firms for seven months. She found one, but it provides only 25 hours of work a week.

"If they could take me on full-time, I would take it in a heartbeat," Gilson said, noting her other job is walking dogs.

The two jobs allow Gilson, 25, to pay her bills, but she does not have much left over after that -- which is of no help to California's suffering shops and malls.

"I'm making ends meet for the time being," Gilson said.

Gorman aims to be a saver -- after paying down credit-card debt accumulated while between jobs. That means her four-person family in Alameda, California, will be on a lean budget for some time. "We're sticking with the basics," she said.

(Editing by Cynthia Osterman)

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