U.S., Calif. Economies Crashing?

John Seiler:

Californians should thank the ghost of Hiram Johnson that taxes weren’t raised in the new budget, and that we got a little tax cut on July 1. Gov. Jerry Brown, the Democratic Legislature and the government unions that own them were defeated, at least for now.

That’s because the economy is halting again. Today’s U.S. jobless numbers were dismal. U.S. unemployment rose from 9.1 percent to 9.2 percent in June. Just 18,000 jobs were added nationally that month.

California’s jobless numbers won’t be released until later this month. But they are unlikely to be any better than the national numbers. After all, California’s 1/9th of the population makes up about 1/9th of the national economy. And our anti-business climate doesn’t look inviting to companies looking for what little jobs creation can be squeezed out.

Reported the Chronicle:

Economists at IHS-Global Insight called the report “a shocker. It was far worse than expected, and weak on all key dimensions — job creation, unemployment, the length of the workweek, and hourly earnings.

“The recent pattern of jobs suggests that the economy hit a brick wall in May. It added an average of 215,000 jobs per month in the three months ended April, but only 22,000 per month in May and June.

“Supply-chain disruptions and bad weather are unconvincing as explanations for the extent of the weakness. A delayed response to the cumulative impact of surging commodity costs during the first half of the year is a more plausible explanation, but this report has dashed hopes that the economy was about to accelerate again now that those costs have eased back. The employment report is showing a much bleaker picture than other indicators…We must hope that it is overstating the extent of the slowdown in the economy — at face value it shows stagnation.

The bad jobs numbers also call into question the assumption in the budget just passed that $4 billion in extra taxes will be collected the rest of the year. The unemployed take far more in government handouts than they pay in taxes.

Tax increases would have fired another torpedo into the Good Ship California. At least we dodged them this time around.

July 8, 2011

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  1. Sol
    Sol 8 July, 2011, 14:46

    It will get worse for sure.

    In 2012 one or two things (or possibly both) will happen. A Demoncrat tax increase ballot initiative will pass or the Demoncrats will gain at least 2 seats in each chamber so they can pass whatever tax increases they want in the legislature. I doubt the former will happen but the latter very well could. And could you imagine what Taxifornia would be like if that happens? Geez, you think things are bad now? You ain’t seen nothin’.

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  2. Barb
    Barb 8 July, 2011, 15:55

    No surprise here! The question for California is: When will a complete collapse occur?

    Reply this comment
  3. SkippingDog
    SkippingDog 9 July, 2011, 21:02

    There isn’t going to be a “complete collapse” of California, no matter how much you may hope and pray for such a thing. If nothing else, the size of California’s economy – still 8th largest in the world – will cause sane and thoughtful officials at the federal level to do anything necessary to avoid such an outcome.

    California’s failure economically would have severe repercussions throughout the country, which is undoubtedly both why many who post here hope so fiercely for it and why it realistically won’t happen.

    Reply this comment
  4. Barb
    Barb 10 July, 2011, 09:03

    Sorry SkippingDog, never meant to imply that I hope/pray for a collapse. Hardly! But the way the wind is blowing in Sacramento, that’s the direction they seem to be taking! You simply can’t spend more than you’re taking in! And to suggest that the Federal Government will somehow throw more money their way because of a purported ranking is being a bit optimistic!

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