Economists Comment on California Jobs Report

California Jobs Report August 2018

California Jobs Report

Economists from Southern California and Northern California Dwight Johnston and Robert Eyler commented regarding Friday morning’s local nonfarm payroll jobs report released for individual counties by the California Employment Development Department (EDD).

Robert Eyler, Board Member of Redwood Credit Union and Economist at Sonoma State University

  • “In 2019 and 2020 we may start to see a hiring slowdown as inflation and interest rates help shape an end to the current economic cycle. A recession still looks unlikely until 2020 or 2021. But job hiring is likely to be marginally slower transitioning from late 2018 into the first-half of 2019.”
  • “California’s job market is in good shape heading into the third and fourth quarters of 2018, short of continued port activity slowdowns or possibly a slower holiday retail season. Worker wages look like they will continue to slowly ascend, even as a tight job market draws some people back into the labor force. But it’s likely we’ll see some longer-term pullback in the retail sector compared to last year as ‘classic retail’ continues to be contested by e-commerce shopping. This will especially be true if inflation jumps.”
  • “Going forward, the Redding area is likely to experience some outmigration of residents due to the recent wildfires, which could impact labor availability and the local job market. Other regions could dip to historic lows in unemployment because of the later stage of economic growth we’re in — namely the Sacramento and Fresno regions. In the Bay Area, there may be some economic impacts from tech-hiring slowing down a bit. And rising living costs in coastal areas will probably continue forcing some workers to shift eastward, either working remotely, commuting or finding different jobs.”
  • “Recent concerns about workforce skills development are mostly hype and chatter right now due to our time, place and circumstance in a tight job market. However, it is smart to plan now for labor force transitions given some of the coming changes in society. These include more e-commerce shopping trends, slow adoption of autonomous vehicles and trucking, an aging workforce, and longer careers because of upcoming changes to Medicare and Social Security.”
  • “On the less-positive side, unknown geopolitics and trade-war retaliation issues hurt states like California more than interior states due to port activity and the high cost of living versus other states. I don’t expect workers to migrate away from California en masse soon, but there are some long-term concerns economists are monitoring. We may see some small relief in housing markets outside of major metropolitan areas — and this can act as a retention tool.”

Contact: 1-707-318-0348 or eyler@sonoma.edu (Labor force churn, job market dynamics, worker wages, business and industry demographics, economic and workforce mobility, monetary policy, the Federal Reserve, banking environment, and the California-to-Nevada migration trend)

Dwight Johnston, Chief Economist for the California Credit Union League

  • “Where workers are less well-positioned is in cost-of-living expenses. While wages in California are rising more than the national average, the high cost of housing remains a significant problem for some local regions and for people not settled in a home or long-term rental property. This can restrict movement and result in lost career opportunities for advancement. Otherwise, workers across California are essentially well-positioned in many cases. Job openings are plentiful, and wages are rising strongly in many metropolitan areas where the local labor markets are especially tight.”
  • “The foreign trade situation with China is a big deal. If President Donald Trump follows through with slapping tariffs on $200 billion in Chinese goods and China retaliates, business running through California ports will decline dramatically. This will impact the entire logistics chain. We would also see damage to the agriculture sector. Beyond that, should the stock market decline sharply on what would then be a real trade war, you will see a sharp pullback in business spending and hiring — especially in the Bay Area, but also in Southern California. If we come to a resolution on China, then steady job growth is all but secured for another year.”

Contact: 1-909-215-3657 or dwightj@ccul.org (Consumer interest rates, the bond market, U.S. Treasuries, financial market reactions and scenarios, the Federal Reserve, monetary policy, and “big picture” daily economic and political chatter)

The California Credit Union League is based in Ontario, CA and is the state trade association for 311 credit unions headquartered in California as of first-quarter 2018.

The League represents the interests of 11.7 million credit union members across the state who are member-owners of their credit unions.

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For more information contact: Matt Wrye – mattw@ccul.org – 909.212.6043