Debra Baer
January 22, 2008
Listen
Everyone knows the state economy is in trouble; but KPCC's Debra Baer says there's no consensus on whether California already is in a recession or is teetering on the edge of one.
Debra Baer: It's time to use the "R" word, says Ross DeVol. He tracks regional economics for the Milken Institute.
Ross DeVol: I conclude that we're probably in a recession right now in the state of California, although nationally I do not believe that we can declare that we're in a recession.
Baer: DeVol, who's also on the state controller's economic advisory board, says we entered a recession this month. He predicts it'll be a mild one.
DeVol: It largely stems from a correction taking place in the housing sector initially caused by the subprime difficulties.
Baer: The latest state job figures show that unemployment rose to a 3 year high of over 6% in December. Employers reported adding more than 15,000 new jobs, but DeVol expects economists to revise that estimate downward. Local economist Jack Kyser says he'll be eager to see January's employment numbers.
Jack Kyser: We're not ready to call a recession yet for the state as a whole, however as you go around the state of California, there are what we would call "spot recessions" – areas that are really struggling. Best example: Orange County is in a recession because of the construction slowdown, and also the significant job loss in subprime lending.
Baer: Kyser says it appears the Los Angeles economy is still growing, though slowly. State Treasurer Bill Lockyer's also waiting for more evidence before declaring a recession. He's characterizing the state of economic affairs as a "period of broad-based deceleration."
