Region leading rather than trailing the recovery

Event! On Thursday, June 10 I am presenting an economic assessment and forecast to the Rancho Mirage Rotary Club. Slides for the presentation can be found here (work in progress).

From March 2021 to April 2021, the Inland Empire’s unemployment rate ticked down by 0.1 percentage point to 7.6%. This number is higher than the national unemployment rate, which stands at about 5.5% (seasonally unadjusted for comparison purposes), but it is lower than California’s 8.1% seasonally unadjusted rate. The comparison with California overall is important because during the Great Recession, the IE suffered a higher unemployment rate than the state average, and it took longer for that rate to decline. This time around the region is leading, instead of trailing, the state’s recovery.

The region also continues to outperform most of its neighbors, with Los Angeles reporting a 9.9% seasonally unadjusted rate in April and Bakersfield 10.7%.

According to this metric, the only major metro area in Southern California doing better than the Inland Empire right now is San Diego, which reported a 6.7% seasonally unadjusted unemployment rate in April 2021. Unemployment rates by county in Southern California show a slightly more nuanced picture, but tell the same general story.

It is not completely clear why San Diego has a lower unemployment rate. Job recovery in the leisure and hospitality sector has been about the same in both metro areas, and as we saw two weeks ago in this newsletter, overall employment growth is stronger out here. There haven’t been any major differences in unemployment claims between these areas either. These are all undisputed facts.

It’s likely that some of the regional differences in unemployment rates have more to do with “noisy” unemployment data than anything else, as a colleague on Twitter pointed out last week. It’s easy to count jobs and employment, especially from establishments; it’s much harder to count the unemployed and labor force participation in general because this information often comes from household surveys, not business establishments.

It’s important to keep the pulse on jobs and to track other indicators – not just the unemployment rate – for signs of progress in the labor market.