How High Could California Unemployment Go?

More

The news out of California this afternoon is morbid. Unemployment has accelerated just past the 11 percent mark, the highest mark the Department of Labor Statistics has ever recorded for the state. How bad could it get?


A lot worse, unfortunately. Unemployment is, after all, a lagging indicator. Companies don't start laying people off until they've digested the impact on their bottom line, and they won't start rehiring in bunches until they sense the economy is dynamic enough to support investment as expensive and long-term as a new employee. Even optimists are talking about the economy not rounding the corner until this fall, which means we could still be a year from the crest of this chart (data from DLS):
Picture 13.pngAt first glance, it looks like unemployment in California could be rounding out after a couple brutal months, but then again, during the summer of 2008 when the bank crisis came into focus on Wall Street, California's empoyment seemed to stabilize before skydiving in December and January.

And there is reason to believe the state could face another wave of credit woes. Southern California has been hit especially hard by the mortgage and credit crisis after years of over-development. As we reported earlier today, analysts expect a second wave of bank trouble as the housing crisis bleeds into the commercial real estate market, an industry that was critical to California's boom during the easy credit days and wil be essential to its comeback.

With that in mind, Michigan's nation-leading 12.6% unemployment rate doesn't seem completely out of reach.
Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

The Death of Film: After Hollywood Goes Digital, What Happens to Movies?

You'll never hear the whirring sound of a projector again.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

Just In