It is early June and its number crunching time in Sacramento. The Governor and the state Legislature (or should I say the Governor and Democratic Leaders of the California Legislature  — since the minority party has no say in this debate) have 9 days to finalize next year’s 2024-2025 state budget. In reaching that agreement, there will be hard decisions which will include a mixture of cuts to state projects, programs and services — those cuts trickle down to local governments who must adjust their budgets accordingly. 

The second looming invention of the budget process is called ‘budget trickery’ that moves funding programs up the road to the next budget cycle and beyond. They borrow from the rainy day funds and backfill targeted state programs using the legislative tool noted as budget trailer bills. These bills do not face the normal legislative scrutiny, rather they are quickly moved through the process with only a handful of legislators’ input before going to the full legislature for a final vote.

As the governor and the legislature grapple with the right fixes — two issues are crystal clear:  There will be winners and losers and framing up the state budget will be plagued by a multi-billion dollar deficit; they can’t count on a booming economy to bail them out. The California Employment Development Department numbers for April 2024 show a mixed bag for job and economic growth.  The report is here: https://edd.ca.gov/en/about_edd/news_releases_and_announcements/unemployment-april-2024/.

- The State’s jobs market expansion entered its 48th month in April 2024. Since April 2020, California has gained 3,057,800 jobs, which averages out to 63,704 per month.
- The state’s current job growth started in August 2023 and has amounted to a total gain of 200,300 jobs. This reflects a rebound from the slowdown during the prior 10 months as the state economy settled following its dramatic post-pandemic recovery.
- Five of California's 11 industry sectors gained jobs in April with Private Education & Health Services (+11,900) posting the largest month-over gain for the fourth consecutive month.
- Trade, Transportation, and Utilities (+5,100) also showed noticeable growth as above-average gains were seen in the Truck Transportation and the Couriers and Messengers industry groups.
- Construction (-6,000) saw a small reduction in jobs due to lingering stormy weather conditions affecting construction projects across the state. The industry remains up 15,100 jobs over the year.
Employment and Unemployment in California (Based on a monthly federal survey of 5,100 California households which focuses on workers in the economy)
- Employed – The number of Californians employed in April was 18,319,100, an increase of 5,800 persons from March’s total of 18,313,300, but down 115,100 from the employment total in April 2023.
- Unemployed – The number of unemployed Californians was 1,027,000 in April, a decrease of 5,900 over the month, and up 164,700 in comparison to April 2023. This is the second time in five months the total unemployed has declined.

What are the data trends here along the Central Coast?

As you can see Monterey, San Benito and Santa Cruz County’s unemployment numbers are higher than the state (4.8%) but looking further south, San Luis Obispo County is near the state’s lowest rate at 3.5%.   

In a recent economic report from Dr. Jon Haveman presented to the Monterey Bay Economic Partnership last month, his comments mirror similar projections that he presented to the Chamber in February.  Multiple factors contribute to a disconnect between what the actual numbers show and how people feel about the economy, according to Haveman. Topping the list is a dearth of local news coverage and analysis, which results in the perceptions of most consumers these days being shaped by an amplified but mixed view of economic data on a largely national level that may or may not apply to their day-to-day lives.

He also points fingers at fellow economists, who in his opinion, can intentionally muddy the waters with the alienating tendency of "trying to sound a lot smarter than they are and say things in a way that people just can't understand." Haveman describes his approach as "edible economics, economics that's easily digestible...in a way that people can understand.” He summarized his talk with these bullet points:
- Manufacturing is experiencing particularly strong growth, led by Santa Cruz County, and the leisure/hospitality and transportation/warehousing sectors are also seeing above-average growth across the region.
- The Monterey Bay region has seen significant increases in manufacturing jobs (5.5 increase) and in information-related jobs.
(14.5), particularly in Santa Cruz County: "Those are two really good industries in which to get outside changes in employment," said Haveman, "so that bodes well for the (regional) economy."
- Employment and labor force growth in Monterey County are nearly at pre-pandemic levels, although recovery in those categories lags in Santa Cruz and San Benito counties relative to their pre-pandemic peak.
- The region's sizable percentage of jobs in agriculture (24.2 for agriculture/forestry/fishing/hunting) and leisure and hospitality (12.9), means that the percentage in other industries is a little bit smaller relative to California and the U.S. as a whole.
- Poverty rates for the region (11.5 percent) remain below the current state (12.1) and national average (12.5)
- While CalTrans offers optimistic projections for the region, the combined trends of aging populations and net out-migration will present challenges for future growth.

Earlier this year we reported on this last bullet with some alarming concerns.  https://web.santacruzchamber.org/news/newsarticledisplay.aspx?ArticleID=2041  Will this trend continue for our region or can the recent movement of housing development encourage more young people to stay in Santa Cruz County? Let’s see where the Governor and the State Legislature land on the final state budget package and how the local government responds.