California’s robust expansion continued in 2014 with improving labor market conditions, rising personal incomes, a strong housing sector recovery, and a well-balanced state budget.
Nonfarm payrolls in California grew faster than the national average during the last three years, surpassing the state’s pre-Great Recession peak by 194,100 jobs in December 2014. The state added 320,300 nonfarm payrolls during the last twelve months, growing 2.1 percent. The state unemployment rate in December dropped significantly to 7.0 percent from 8.3 percent a year ago, but still remains elevated compared to national unemployment of 5.6 percent for the same period.
We expect California’s labor market to continue its momentum, growing at an accelerated 2.4 percent in 2015 and 2.2 percent in 2016, adding nearly 730,000 new jobs in the state by 2017. Over 70 percent of those jobs will be created in professional & business services, education & health, leisure & hospitality, and construction sectors.
The Bay Area is expected to grow faster than other regions of California over the next couple of years due to its robust technology sector and large share of high-skilled technical workers.
The downside risks for California include a possible decline in investment activity in the Bay Area and decrease in agricultural and related products production and exports due to exceptional drought in the ag-intensive Central Valley. Weak demand from the rest of the world and a strong dollar could also slow the growth of California’s export-oriented economy. Conversely, an improving labor market, rising wealth, and increasing retail sales could fuel stronger than expected economic growth in California.
Check out the latest California Regional Economic Outlook report here to learn more about how various regions of California compare.Tags: Bay Area, economy