An unexpected development seems to have happened on the way to the Great California Train Wreck. The locomotive has gotten itself back on the rails, leaving naysayers standing along the tracks.
The most recent evidence came in the state jobs report released Friday. It showed a third consecutive month of strong job gains, and a year-to- year increase of 365,100 jobs that was the largest 12-month increase since 2000.
"Compared to the rest of the United States, employment gains here have been much more rapid," California State University, Channel Islands, economist Sung Won Sohn said.
Sohn, formerly chief economic officer of Wells Fargo Bank, acknowledged that the numbers have been surprising to some. "This has been going on for some time. Initially, people thought it would be somewhat temporary, but it has been much more long-term."
The July report showed broad-based gains — strongest, as has been the case for a while, in the technology sector, but also robust in wholesale trade and tourism, and at long last there are signs of growth in construction and real estate.
Over the last 12 months, the number of jobs in California has increased by 2.6 percent, double the 1.3 percent growth nationwide. As Mark Paul, a senior fellow at the New America Foundation, noted last week, more jobs have been created in California over the last year than in Texas and New Jersey combined.
Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, notes that gains have not been even across the state. For many months, high-tech employment has been lifting the economies in the Silicon Valley, San Francisco and parts of Orange and San Diego counties.
The hard-hit Inland Empire, he points out, began to start showing growth about the middle of last year, and it's been just within the past few months that Los Angeles County has begun to rebound.
Export activity has been strong at California ports, Sohn noted, in part because trade with Asia and Latin America has kept pace while exports from East Coast ports have been hurt by a struggling European economy.
The job gains in California have not been enough to substantially drive down the state's double-digit unemployment rate, but the movement is in the right direction. It's now at 10.7 percent, down from 11.9 percent a year ago, and down further still from the high of 12.4 percent recorded in October 2010.
There is just one thing, Levy told me, that could make a real dent in that stubborn statistic: a comeback in the industry that was most responsible for driving it up to double-digit territory. That is construction, where 600,000 jobs were lost after the burst of the housing bubble and the financial meltdown.
"Construction is the key to blue-collar employment" Levy said. "When it begins to show gains, that will be a real signal to lots of people that the recovery has spread to them."
There are some promising signs in that area. A survey of West Coast homebuilders this month showed optimism among developers at a six-year high. The California Association of Realtors reports that median home prices in July went up for the fifth straight month. The median price now stands at $333,860 — up 36 percent from the recession low of $245,230.
It adds up to suggest that the California Train Wreck has been averted, even if many of the underlying concerns about the business climate, government finances and regulatory policies remain.
"Clearly, Sacramento has added to California's economic problems," Sohn told me. "But when people read about these things, especially from out of state, they think we're in dire trouble." The facts are revealed in the numbers. Sohn states his conclusion of what July's employment figures reveal about the state of the state economy: "Employment gains have been sustained. It's a pleasant surprise."
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