06/26/2022

Is California Already In Recession?

The data for this chart is taken from the summary tables for the state’s monthly reports on the California Demographic Labor Force, which are produced by California’s Employment Development Department. These are therefore the same numbers that Governor Brown sees, and they have been signaling throughout 2017 that the state’s economy is going through a period of stagnation after having generally grown since bottoming in mid-2011 following the Great Recession.

The labor force and employment numbers aren’t telling the full story however, which becomes evident when we factor in the state’s growing population. The following chart shows the labor force and employment to population ratios for the state’s civilian work force.

In this chart, we find that California’s employment to population ratio peaked at 59.2% in December 2016, having slowly declined to 59.0% through October 2017. Meanwhile, California’s labor force to population ratio last peaked at 62.6% in October 2016, which has since dropped to 62.1% a year later.

Going by these measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis:

On a final note, the charts we’ve featured above were adapted from our project tracking the impact of California’s minimum wage hikes on its teen labor force, where we’ve been that labor force and employment data since July 2003 (which hopefully helps explain why the trailing 12 month labor force and employment to population ratio chart starts showing data beginning in June 2004). As bad as the charts above are for California’s labor force, the employment situation for California’s teens is much worse, having itself peaked in October 2016.

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