Gavin Newsom loves to boast about the state he governs, claiming that California is No.1 in some category or that the state is leading in some economic or cultural activity.
Sometimes his boasts crumble in the face of reality, such as his 2022 declaration that the state budget had a $97.5 billion surplus and “no other state in American history has ever experienced a surplus as large as this.”
It was later revealed that the surplus claim was based on
revenue estimates that were wrong by $165 billion over four years, leading to multibillion-dollar budget deficits.
Undeterred, Newsom has continued his boastful ways. A few weeks ago bragged that California, were it a nation,
now has the world’s fourth-largest economy at $4.1 trillion, edging out Japan.
“California isn’t just keeping pace with the world — we’re setting the pace,” Newsom cheered. “Our economy is thriving because we invest in people, prioritize sustainability and believe in the power of innovation.”
Actually, California’s edge over Japan is more the result of currency exchange calculations rather than productivity, but $4.1 trillion is still a big number. Unfortunately, its size masks the darker reality that, by many measures, California is doing no better than treading water.
As the Legislature’s budget analyst, Gabe Petek, said in a
report on California’s budget situation late last year, “California’s economy has been in an extended slowdown for the better part of two years, characterized by a soft labor market and weak consumer spending.
“While this slowdown has been gradual and the severity milder than a recession, a look at recent economic data paints a picture of a sluggish economy. Outside of government and health care, the state has added no jobs in a year and a half.”
What Petek described six months ago is still true, as recent employment data indicate. In April, the state’s unemployment rate, 5.3%, was
higher than all but two other states, Michigan and Nevada, and it’s been stuck at that elevated relative position for several years.
“Since February 2020, the state’s labor force has grown by just 126,100 workers, a 0.6% increase,”
Beacon Economics said in an analysis of the April data, adding, “This slower growth is being driven largely by the state’s chronic housing shortage and the retirement of aging workers.”
Justin Niakamal, Beacon’s research manager says “it’s difficult to see how California will be able to break out of its slow-growth cycle when there has been virtually no increase in housing production. This is an elemental problem that is impacting the state’s ability to grow its population, industry and economy.”
A major indication of California’s relatively moribund economy is what has been happening in the San Francisco Bay Area’s technology industry, a sector that, in essence, has been
propping up the entire state in recent years.
Having expanded during the COVID-19 pandemic to serve those confined to their homes and working remotely, the industry has been
shedding jobs month by month.
While Newsom cited numbers from the federal Bureau of Labor Statistics in claiming that California now had the globe’s fourth-largest economy, he didn’t trumpet a
recent bureau study that underscores the state’s poor employment picture. California has more than a million unemployed workers. The new bureau report reveals that the ratio of jobless workers to job openings is the highest of any state, 1.6 jobseekers for every one open job.
To put that data point another way, if every job opening in California were to be filled, we’d still have hundreds of thousands of Californians on the unemployment rolls.
That’s nothing to brag about.
