California posted another strong jobs report on Friday as the unemployment rate fell to its lowest point since before the pandemic; but the news was overshadowed this week by the surest signs yet of a wobbly economy that could soon usher in a recession.
Employers added 42,900 new jobs in May, lowering the unemployment rate to 4.3%. That’s the lowest rate since the 4.1% reached in February 2020, just before the nation’s most populous state shut down many businesses because of the coronavirus and lost more than 2.7 million jobs.
California has now regained 93% of the jobs it lost at the start of the pandemic, according to the Employment Development Department. But the news was tempered by other signs of trouble this week as inflation hit a 40-year high, stock prices tumbled and the Federal Reserve imposed the biggest interest rate hike in nearly three decades.
California’s economy will likely be impacted more than other states by those developments, given the state’s reliance on real estate and income derived from capital gains — money made from the sale of various assets, including stocks.
’I think from here on things are going to get worse, not better,” said Sung Won Sohn, a professor of economics at Loyola Marymount University.
The Federal Reserve on Wednesday increased the interest rate for banks when they loan money to other banks. That rate impacts other interest rates across the economy, including mortgage rates.