The spread of COVID’s delta variant is slowing California’s economic recovery as it seeks to rebound from the epic job losses that devastated the state and Bay Area at the start of the pandemic, according to the state’s leading economic forecast, released Wednesday.
The growth of California’s job market is expected to trail the United States in 2021, according to the UCLA Anderson Forecast, which just six months ago projected that the Golden State would bounce back much faster than the nation. Now, forecasters said, it will be 2022 before the state is poised to charge past the nation.
The latest quarterly forecast found that California didn’t really roar back to recovery after the statewide economy was formally reopened in June of this year. In fact, measured by nonfarm payroll employment, California’s job market is predicted to grow by just 1.8% over the course of this year — less than half of the 3.7% increase projected for the nationwide economy.
“The opening of the economy does not necessarily mean a return to normalcy,” Jerry Nickelsburg, director of the UCLA Anderson Forecast, and Leila Bengali, a UCLA Anderson economist, wrote in their joint report on the outlook for the California economy.
Things look brighter for California next year. Total jobs in California should increase 4.9% while the U.S. job market is expected to expand by 3.1%, according to the Anderson Forecast.
“Although California began a significant recovery later than some other states due to the public health interventions in the state, we expect the California recovery to ultimately be, once again, faster than the U.S.,” Nickelsburg and Bengali wrote.
Still, the state must climb an Everest-size mountain to regain the jobs it lost in historic numbers during government-ordered shutdowns to help combat the spread of the coronavirus.
The state has recovered only 62.1% of the 2.71 million jobs it lost during March and April of 2020, at the outset of coronavirus-linked shutdowns. That means California must still add a jaw-dropping 1.03 million jobs to regain the ground it lost during those two months.
First-time unemployment claims have remained stubbornly high, even as the state in August reported adding more than 100,000 jobs and the Bay Area reported its strongest gains in five months.
And as a further measure of the weakness of the California economy, the Anderson Forecast predicted that the unemployment rate statewide will average 7.6% in 2021, before dropping to 5.6% in 2022 and 4.4% in 2023.
That means it could be two years before the state returns to its record-low unemployment rate of 3.9%, last achieved in February 2020. Put another way, a return to those low jobless levels isn’t even within the prediction window for the Anderson Forecast.
The forecasters also warned once again that California’s battered leisure and hospitality industry won’t experience the end of its coronavirus-induced economic troubles any time soon.
“The leisure and hospitality sector will be the last to recover due to the depth of the decline in this sector, the slower return of restaurant and bar services demand and the sub-sectors dependent upon international tourism demand,” Nickelsburg and Bengali wrote.
