Looming California Recession Update

Continuing my "sky is falling" rhetoric when it comes to the California economy, we now have over a million unemployed citizens, and even the positive job news is fleeting.

Despite a boost from the Hollywood job machine, the state unemployment rate ticked up in September, when more than 1 million Californians were looking for work, the first time that benchmark had been breached in nearly three years.

Jobs were added to the economy during the month but nearly half were in Los Angeles in the entertainment sector, according to figures released by the government Friday. Producers have been racing to get movies and television shows in the can in anticipation of a writers strike.

And Hollywood probably won't deliver a happy ending. Strike or no, when the shows and movies are finished, many of those jobs will evaporate.

And it looks more like strike than no, as the WGA overwhelmingly voted to authorize a strike, by a 90%-10% margin. That could happen as soon as Halloween. Most studios aren't signing writers to any future deals right now, in anticipation of a strike. And the contracts of the Screen Actors Guild and the Director's Guild are up next summer.

Besides meaning a lot of crappy reality shows coming to a TV screen near you, this means a great deal of production personnel out of work. And that just adds to the strain on the economy right now.

Esmael Adibi, an economist at Chapman University, said it was important to note that payroll job growth had slowed to 1.1% in September from 1.6% in January and that beyond construction and financial services, the professional business services sector jettisoned jobs in September.

"Every indication is the weakness is becoming more broad-based," he said. "Retailers are getting nervous about consumer spending, and clearly they are not adding to the employment base. The job machine is getting tired."