Los Angeles County and the state of California has many reasons to celebrate in terms of enjoying a recovering economy. At the same time, there are still a few things to be concerned about. While unemployment rates are falling and the state predicts a surplus to the budget for the next fiscal year, there are some major economic issues that the state has yet to face.
Unemployment Rates on the Fall
According to figures released by the California Employment Development Department, the unemployment rate in Los Angeles County fell to a seasonally adjusted 6.1 percent in October from 6.5 percent in September. These figures also represent a decline when compared to one year ago, at which time the unemployment rate was 8 percent. The unadjusted unemployment rate for the county was 5.9 percent in October. Altogether, the civilian labor force fell by 28,000 during the month of October to 5 million.
Between September and October, nonfarm employment increased by 37,800 jobs within the county, reaching 4.4 million. Among these, government jobs saw the greatest increase with 16,700 jobs added. This was largely attributed to payroll gains in local government, though state and federal government positions also contributed to the gain. Meanwhile, professional and business services added 8,300 jobs, while 4,100 jobs were added within the professional, scientific and technical services industries. Administrative and support and waste services added up to 3,800 jobs while up to 400 jobs were added in the management of companies and enterprises sector.
When taking a step back further and looking at the entire state, the seasonally adjusted unemployment rate was 5.8 percent in October. This represents a slight drop when compared to September, at which time the rate was 5.9 percent. The figures are much better when compared to October 2014, at which time the unemployment rate was at 7.2 percent.
On the national level, the unemployment rate was 5 percent in October, which is down slightly from the 5.1 percent that was recorded in September and the 5.7 percent recorded for October 2014.
State Looking Toward a Surplus
In addition to seeing a decline in the unemployment rate, the state of California expects to go into the next fiscal year with a surplus of $11.5 billion. According to the Legislative Analyst’s Office, the state budget is currently better prepared for an economic downturn than it has been for several years. The most recent budget projection estimates exceed the estimates that had been made over the summer, which anticipated a $3.6 billion surplus.
Given the fact that Governor Jerry Brown took the office with the state in a $26 billion deficit, news of a surplus is certainly welcome. On the other hand, it should be noted that the California Department of Finance projects that the state is facing $227 billion in long-term debt, largely due to public pensions. Furthermore, the board of the California Public Employees Retirement System anticipates seeing future investments providing a return rate of 6.5 percent, which is one percentage point less than previously expected. This means taxpayers will need to pay billions more toward pensions than what had been anticipated. The state also faces a $1.1 billion shortfall in Medi-Cal funding due to disagreements among lawmakers regarding the development of a tax plan.
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(all data current as of 5/25/2017)
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