California unemployment rate jumps to 6.1 percent

As reported in Los Angeles Times:

California’s jobless rate jumped to 6.1% in December, up from 4.8% a year earlier, prompting Gov. Arnold Schwarzenegger to move to expedite public works projects in an effort to stimulate the economy. The surge in unemployment, up from 5.6% in November, was the latest sign of the toll of the housing slump, the sub-prime mortgage debacle and production shutdowns during the Hollywood writers strike.

The job figures released Friday by the state Employment Development Department also suggested that the malaise had spread to the retail sector, in which employers shed 2,200 positions in December. That loss in a month when merchants typically post gains brought the total decline in retail jobs for the quarter to 12,200. Some economists said the report was another harbinger of recession; others thought the figures were likely to improve somewhat when more data were available. Most agreed that the state’s budget problems had just begun.

“We’re headed for probably a sharper slowdown than any of us expected two months ago,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, adding that it could tilt into a “mild recession.” “That’s going to put a lot of pressure on state and local government budgets,” he said.

Schwarzenegger announced his response to the weakening outlook about the same time the job figures were released, saying he wanted to spur the economy and “keep more people working.” The governor held an emergency Cabinet meeting Thursday, when he told agency and department heads to work to speed the release of $29 billion in 2006 bond fund money for road and school construction and levee repairs.

“The people of California are feeling the hit of the sub-prime mortgage crisis and housing slump,” he said in a statement. “While other sectors of our economy remain strong — creating more than 15,000 new jobs last month — it’s clear that California and the rest of the nation will have to weather this disruption for a while.”