No one knows whether the good times will continue or the state will experience a recession,
was a strong one for California’s $3.4 trillion economy.
The state added 621,400 jobs, finally regaining the nearly 3 million that were initially lost during the COVID-19 pandemic as Gov. Gavin Newsom shut down major economic sectors. The year ended with a near record-low 4.1% unemployment.
“California continues leading the nation’s economy,” Newsom boasted after the December employment report was issued this month. Earlier he projected that if California were a nation, it would be close to surpassing Germany as the globe’s 4th most powerful economy.
All good. In fact, some economists believe that California’s job growth is so strong that only a shortage of workers – due to a decline in the number of Californians seeking work – is a major impediment to expansion.
That’s the economic upside.
The downside is that no one seems to know whether the good times will continue or the state will experience one of its periodic recessions, which tend to hit about once a decade.
For the last few months, the Federal Reserve System has been attempting to dampen inflation by raising interest rates. Its stated hope is that the economy will cool off enough to curb inflation but avoid a sharp downturn into recession.
