ShareThisSo this is what economic recovery looks like: 12 percent unemployment, more vacant storefronts and a seemingly endless state budget crisis that will prolong the furloughs, layoffs and other wounds.
A prominent economist has declared California's recession over as of the fourth quarter last year but acknowledged that most Californians might not even notice.
"It's going to feel like a recession for a while longer," said Jeff Michael of the University of the Pacific, which issued its quarterly economic forecast Wednesday.
Michael's declaration comes amid a flurry of statistical releases that provide a mixed view of the economy. Fresh figures from the Institute for Supply Management showed that U.S. manufacturing activity in December rose to its highest level in nearly three years. But the National Association of Realtors reported a sharp drop in home sales in November, the first decline in a year, suggesting the housing market might undergo another downturn.
Mixed signals are somewhat common as an economy bottoms out; the early months of a recovery tend to be rocky. The unemployment rate is typically slow to fall, as employers are cautious about rehiring workers until they're sure the recovery is for real. Nevertheless, economist Chris Thornberg believes California's economy will eventually rebound smartly.
"In the long run, recovery in California is going to be solid," said Thornberg, head of Beacon Economics, a consulting firm in Los Angeles. "In the short run, it's going to be weak."
Some economists have said the early stages of the recovery will be so weak that the country could go into a "double dip" recession comparable to 1937, when the Depression reasserted itself after a few years of recovery.
Practically everyone agrees the recovery in California will be slow at first, due largely to the state's gross overexposure to the real estate bubble.
"You kind of peek around and you see little bright spots," said Greg Gross, a Sacramento analyst for national real estate market consultant Metrostudy. "There's going to be pockets of entrepreneurs; it's going to happen again. But it's going to be longer and slower."
Charting recessions and recoveries is more art than science, and Michael acknowledged that there's no way to know for certain if the recession has ended in California. But he said, "There are some indications that we're hitting bottom."
On the U.S. level, a private organization called the National Bureau of Economic Research makes the semiofficial call about the beginning and end of recessions. It said the latest recession -- defined as a "significant decline in economic activity spread across the economy, lasting more than a few months" -- began in December 2007.
Although the bureau hasn't declared an end to the recession, many economists believe the recovery began in mid-2009, when the economy started growing again.
Michael said the recession hit California three or four months earlier than the rest of the country and lingered three or four months longer, ending late last year.
Job numbers from the state Employment Development Department suggest the worst is likely over. For a while, California was losing at least 60,000 jobs a month. In November the statewide job losses came to 10,200, putting the California unemployment rate at 12.3 percent.
Michael said the weak construction market will continue to enfeeble much of California in 2010. Housing starts statewide will increase to 51,000 this year, a 38 percent increase, he said.
But "you're still looking at the second-lousiest year ever" for housing starts, he said. The worst was last year, at 37,300. Housing starts won't hit normal levels, around 148,000, until 2013, he said.
Reach Dale Kasler at dkasler(at)sacbee.com. For more stories visit scrippsnews.com
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