Web Version [link removed] | Update Preferences [link removed] [link removed] California Employment Report
for January 2020:
Last Economic Snapshot Prior to Effects of COVID-19; Preliminary Assessment of Sectors Likely To Be Most Affected by Ongoing Crisis
The Center for Jobs and the Economy has released its full analysis of the January employment data. For additional information and data about the California economy visit [[link removed]].
COVID-19 and the State Economy
The potential effects on the state economy continue to expand as additional social distancing measures are put into place to combat the spread of the coronavirus outbreak and as consumers begin to redirect their consumption patterns in response to the looming economic uncertainty. The full effect still remains unknown and depends on the duration of the current public health emergency and subsequent readjustment period to return to normal in particular the time required to overcome the many current supply chain disruptions.
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While by no means comprehensive, preliminary impacts by industry include the following:
General Economy. After projecting a short-lived, one-quarter dip in the state’s economy last week, UCLA Anderson Forecast revised their numbers showing a likely recession (two consecutive quarters of decline in real GDP) in the first half of the year. Their projections envision a more severe drop for California due to the high concentration of Transportation & Warehousing, Agriculture, and Leisure & Hospitality jobs within the state. As summarized for California:
Employment is expected to contract by -0.7% in 2020 with the 2nd and 3rd quarters contracting at an annual rate of 2.6%. The unemployment rate will rise to 6.3% by the end of this year and expected to continue to increase into 2021 with an average for 2021 of 6.6%. By the first quarter of 2021 of the year California is expected to lose over 280K payroll jobs with over 1/3 of those in leisure and hospitality and transportation and warehousing. The expectation is for 2021 to be a slow recovery year and 2022 a year of growth once again.
McKinsey & Company has simplified their previous analysis for the US to two likely scenarios [[link removed]]: (1) a Delayed Recovery which results in a recession in Q2 and Q3, with global recovery in Q4; and (2) Prolonged Contraction with a more severe downturn in 2020 and recovery beginning only in 2021 Q2.
Most other forecasts also have been revised to project a downturn nationally in the second quarter but reflecting the current uncertainty, differ in the extent of the decline. A recent summary [[link removed]] of different sources shows real GDP falling (compared to the first quarter) from 3% to nearly 12% in the most pessimistic viewpoint:
J.P. Morgan Chase: -3% Wells Fargo: -3.3% Morgan Stanley: -4% Goldman Sachs: -5% IHS Markit: -5.4% UCLA Anderson Forecast: -6.5% TS Lombard: -8% Pantheon Macroeconomics: -10% Berenberg: -11.7%
Current projections have in common an expectation that the downturn will be sharp but short-lived, with the recovery phase being more gradual but returning to the previous trend as conditions return to normal. These expectations could change as more information becomes available on the duration and severity of the current outbreaks.
Read the Full Report » [[link removed]] The California Center for Jobs and the Economy provides an objective and definitive source of information pertaining to job creation and economic trends in California. [[link removed]] Contact 1301 I Street Sacramento, CA 95814 916.553.4093 If you no longer wish to receive these emails, select here to unsubscribe. [link removed]
