A clearer picture is emerging
of the California economy subsequent to September 11, 2001. California
clearly suffered less than the nation as a whole, with the state’s 4,300 drop
in nonfarm jobs amounting to only 1 percent of the nationwide loss of 415,000
jobs. September construction data reflect a partial post-attack month, and
building activity slowed dramatically, with both residential and nonresidential
construction experiencing the weakest month of the year.
Industry employment estimates for October show a decline in all private industry sectors, with the exception of a small gain in finance, insurance and real estate. The state appears, however, to be faring better than the nation as a whole.
The impact of the September 11 attacks is difficult to gauge. Air transportation lost 4,300 jobs, which is about 10% of the national losses. Hotels shed 3,500 jobs, which represent about 8% of the national loss. Eating and drinking places actually added 4,600 jobs, even though the nation as a whole dropped 37,000. Transportation services, which include travel agents, lost 300 jobs in California, compared to 12,000 nationally.
Manufacturing employment dropped 10,900 in October with weakness in both high-tech industries—computers, electronics, aerospace, and instruments—and in construction-related fields. Chemicals posted the only gain in October. Nationally, manufacturing dropped 142,000 jobs.
Service sector employment fell by 4,100 in October with large losses in private education services (2,100 jobs) and in motion pictures (2,000 jobs). Business services, last year’s growth leader, declined for the sixth consecutive month.
Local government employment rose 18,200 during the month, after dropping more than 22,000 in September, reflecting difficulties in seasonally adjusting beginning of school year figures.
On a year-over-year basis, total industry employment grew by 103,200 or 0.7 percent, while the nation lost 378,000 jobs, a drop of 0.3 percent. Wholesale and retail trade added the most jobs, 41,800. Services was not far behind, adding 40,800 jobs. The motion picture industry lost 2,000 jobs, in the aftermath of heavy strike-hedge activity in the first half of the year. Manufacturing employment has fallen by 76,600 jobs over the year, with over half of the losses coming from the state’s high tech sectors.
California's unemployment rate rose 0.3 percent to 5.7 percent in October, with the unemployment rolls growing by 47,400. Nationally, the jobless rate jumped 0.5 percent to 5.4 percent.
Following a modest recovery in August, construction activity slowed September. Residential construction, measured by permitted units, fell 17 percent from August and almost 18 percent from a year ago. September’s seasonally adjusted annual rate of 116.5 thousand permitted units was the lowest rate since February 1998. The slowdown in residential construction that heretofore had been primarily confined to the San Francisco Bay Area spread throughout much of the state in September. Through August, residential construction was running slightly ahead of the 2000 year-to-date total. With September’s retrenchment, however, residential permitting during the first nine months of the year fell 1.3 percent below the total for the same period of 2000.
Nonresidential construction was also down in September, falling 34 percent from both the previous month and from September 2000. Total nonresidential construction during the first nine months of 2001 was down 5.4 percent from the same months of 2000.
In September, sales of existing single-family homes dropped 16.1 percent from a year ago, the largest year-over-year decline in sales since December 1999. The median single-family home price, at $276,960 was essentially unchanged from August.
Monthly
Cash Report
Preliminary General Fund agency cash for October
was $220 million below the 2001 Budget Act forecast of $4.630 billion.
Year-to-date, revenues are $827 million below expectations. This month’s
receipts reflect activity subsequent to the September 11 events with the
exception that third-quarter sales tax data are not yet finalized.
Sales and use tax receipts were $7 million below the month’s forecast of $1.682 billion. The final payment for third-quarter taxable sales was due at the end of October and a portion of this payment is received in early November. At the time this bulletin was prepared, early November receipts were not yet complete; a clearer picture of third-quarter sales will be available by mid-November. Year-to-date through October, the sales tax is $11 million above expectations.
Bank and corporation tax revenues were $10 million below the month’s forecast of $241 million. Prepayments were $21 million above the estimate of $174 million and other payments exceeded the estimate of $136 million by $28 million. The combined gain, however, was offset by refunds, which were $59 million above the projected level of $69 million. Year-to-date, this tax is down $314 million from forecast.
Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes came in $28 million above the $125 million that was expected. The remaining revenues—pooled money interest income and “other” revenues—were $22 million lower than the month’s estimate of $73.
Personal income tax revenues were $209 million below the month’s forecast of $2.509 billion. Withholding was $60 million below the estimate of $2.094 billion—3.7 percent below the year-ago level. Other receipts were $21 million lower than the forecast of $569 million, and refunds were $128 million higher than the projected level of $154 million. Year-to-date, this tax is $698 million under forecast.
General Fund Agency Cash
2001-02 Budget Act Forecast
2000-01 Comparison of Actual and Forecast
Agency General Fund Revenues
For more information, please contact the California Department of Finance,
Room 1145, State Capitol, Sacramento, CA or call (916) 323-0648.
