Back in mid-December, Political Calculations asked if California was in recession.
Going by these [household survey based labor market] measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis. [text as accessed on 12/27/2017]
The release of May state-level employment and coincident index figures provides an opportunity to revisit this question — it’s likely no recession occurred.
First, the coincident indicators for California and US:
Figure 1: Log coincident index for California (blue), and for US (black), normalized to 2011M01=0. Source: Philadelphia Fed, and author’s calculations.
Second, nonfarm payroll employment figures:
Figure 2: Log nonfarm payroll employment for California (blue), and for US (black), normalized to 2011M01=0. Source: BLS, and author’s calculations.
Third, nonfarm payroll and civilian employment figures for California.
Figure 3: California nonfarm payroll employment (blue), and civilian employment (over 16) (black), 000’s, s.a., on log scale. NBER defined recession dates shaded gray. Source: BLS, and NBER.
The civilian employment series from the household survey provides a worrisome trend — until one remembers that the state level household series is subject to subtantial measurement error, even for a state as large as California. To see this, consider what different vintages of the household employment series indicate about the level of employment.
Figure 4: Civilian employment for December of indicated years, and April of 2018. Source: Chinn and LeCloux (forthcoming) using BLS data.
As is obvious, there is tremendous variability in the different vintages of the household employment series, which makes it ill-advised to place too much weight on these series.
Wells Fargo assesses the labor situation thusly:
Month-to-month volatility distracts from the underlying strength still evident in California’s year-over-year payroll growth. All of the Golden State’s major industry payrolls are up over the year, except other services. Manufacturing payrolls are expanding solidly after languishing for much of 2017. Industrial machinery, computer and electronic products, semiconductors and motor vehicle producers are all expanding payrolls solidly. Construction employment is growing across California, with residential building and nonresidential building expanding payrolls along with heavy and civil engineering and specialty contractors. A push for more affordable housing in California’s major metro areas is fueling construction in most of California’s larger metro areas and is also spurring more development in the Inland Empire and Central Valley.
Other aggregates are shown in this post Through 2018Q1, personal income is up 5.1% (log terms). Real GDP through 2017Q4 is up 3% (log terms).
All these data suggest to me that California did not, and is not currently in, recession. For previous assessments, see: [1] [2] [3] [4] [5] [6].
Of course, all bets are off going forward, as California is a steel using, export oriented state, and Mr. Trump seems intent to damage both of these sectors.
Maybe it will be like North Korea. Trump goes all Crazy Ivan on California. Then there is a “summit.” Then everyone goes back to doing what they were doing before.
Wondering if there’s a big variation in the way or just efforts of different US states to track these type of economic data?? I guess to a degree it doesn’t matter because it seems the implication is that state level “household data” is largely unreliable. But in the state I live in it doesn’t seem like this data is quantitated very well. And what I get tired of (and kind of aggravated about) is local politicians (state and metro city level) taking credit for “job creation” when the evidence seems paltry. Both the politicians’ supposed “causal” connection to the job creation and the jobs themselves.
I hope California housing prices can crash to earth while my son keeps his job and can buy a house. The bank of Mom and Dad has funds languishing in an account to help him. The wife will waste it on a Tesla if that doesn’t happen soon.
Our daughter and SIL are thinking of selling and moving in with us for a period waiting for the crash and then moving up. He has a job with Apple and has been getting promotions and pay increases. A smart hardworking young man. Hope this works for them. The wife will be in heaven with a new grandchild to spoil.
Things are terrible here! STAY AWAY!!!
@ dilbert dogbert
You’re cracking me up. (laughing with you, NOT at you). You need to make a video journal of this. Along with video camera footage of you scanning the Cali real estate prices (use a hardcopy LA Times to humor me).
Just be careful the SIL doesn’t become “not economically viable”. I was in my early 20s when this film came out (probably with a social maturity level closer to 16). I was one of the weirdos (angry white males??) that ignored critics claims this film was sympathetic to racists and went to the theater to watch this. Don’t remember ever seeing a character play a smaller role in a film than “not economically viable guy” that seemed to hit me right at the core of my soul. The actor’s name is Vondie Curtis-Hall, actually a HELL of a great actor, and played the journalist in Netflix’s “Daredevil” series (A character that also hit me deeply).
https://www.youtube.com/watch?v=G7oglIAdnJM That scene still gets to me every time, especially his parting words inside the police car.
As long as California continues to attract rich people and tourists from all over the country and the world, it should do well:
http://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html
And, if trading partners weren’t intent on maintaining their cheating and stealing, California would do even better.
I thought you hated California. Oh wait – as long as you get to hang with rich white dudes, all is good.
Pgl, you thought wrong (again).
Don’t like the corrupt, wasteful, and greedy government.
Trump is the poster boy for corrupt, wasteful, and greedy government. Be careful lest they fire you for saying this as I’m sure no one else would ever hire you to shill for them. Failed as a banker and about to fail as a Trump spin boy.
The gap between California and the US is probably understated because California is included in the overall US numbers; i.e., California is pulling up the US data. Not a significant problem when looking at small states like Wisconsin or Kansas, but California is another story.
2slug,
It’s difficult to relate the charts above to the BLS data for California for the last 6 months: https://www.bls.gov/regions/west/california.htm#eag . Labor force has declined while employment is up only slightly. I’m looking at the most recent 6 months because the question is one of the current situation: “Is California in a recession?
Compared with Menzie’s whipping boy, Wisconsin, https://www.bls.gov/regions/midwest/wisconsin.htm#eag, where labor force and employment are both up over the last 6 months, California has not fared as well. California’s unemployment rate is above the national average.
Now I expect to see a reply about he low confidence of state level statistics.
Off-topic
I think things are starting to get interesting here market-wise. This is the first I had read (though I am not keeping close tabs on it) that China would actually have some fears about devaluing the currency. What I had assumed was that China would make a one time dramatic move down in the currency. I still hold that view. But….. I think this article shows it’s a little complicated, and somewhat of a balancing act for China, whereas until I read this, I didn’t think China would even blink once to devalue:
https://www.bloomberg.com/news/articles/2018-06-26/china-s-role-as-a-market-anchor-at-risk-with-rapid-yuan-slide
There is a Chinese lady at ING bank in an embedded video in that link, and maybe it’s a language problem, but she doesn’t sound very sharp at all (Maybe one of those deals where she’s some Politburo member’s niece and ING gave her an office to make him happy?? No idea). The way she was saying “yuan” I thought for awhile she was saying “UN” which is neither here nor there, but I wish Bloomberg would filter these people you can’t understand. Trust me, I’m very good at listening to thick Chinese accents, I knew village girls in Northeast China with less accent than this woman, WOW. Her argument that China is more “prepared” for a trade war is laughable. This gets back to the sheer volume of Chinese exports that Menzie has referred to before and that they have no way to match that if you look at it exclusively on a value of goods traded basis.. Now I get the whole “asymmetrical” thing (a strange term in my opinion to use in this context, as it relates more to variation of trade weapons than “symmetry”) but if you think that the currency is China’s 2nd strongest weapon here (or 2nd strongest poker card) I’m having a hard time figuring out what other moves they have.
And I’ll tell you something else, I went over there around 2001 without hardly batting an eyelid. If you are American and you go over there right before a major trade war starts—you need to have a major psychological breakdown done on yourself along with a CT scan on your brain. And if they don’t find any anomalies on the CT scan—tell them to run it again because you have issues.
California GDP $2.44Trillion
Russia GDP. $1.33 Trillion
Wisconsin GDP $324 Billion. (5/18)
SanFrancisco-Oakland GDP $432 Billion (Fall, 2017)
Noneconomist, yet, a lot of people making less than $100,000 a year would rather live in Wisconsin than California – or at least put up with 120 degree summer weather in Nevada desert dirt country.
And, you wouldn’t live well in Oakland on $50,000 a year. You’d be in poverty on that much in San Francisco (even in Oakland).
Alameda County (Oakland-Berkeley) unemployment 2.6%
San Francisco unemployment 2:1%
Greater Bay Area GDP: $781 Billion
Bay Area population is increasing, though more slowly than in the past. Many employed in the Greater Bay Area commute from inland areas. Sacramento is seeing more GBA home buyers.
Also of note two wealthy Trump counties—Placer and El Dorado, both located E of Sacramento—gained population in the last year. Their unemployment rates are also quite low, but their home prices are not. Median income levels are quite high, though not at GBA levels.
In any of theses areas, existing solely on a $50K income would be a challenge unless the earner already was a homeowner. Median CA. Income is around $70k. Over $100k in SF.
OK – you can’t afford Oakland. Hell – given your incompetence, you couldn’t afford to living in Alabama.
He might do ok in Tulare County, where the median family income is around $46K. Tulare’s MC is none other than favorite Trump toadie Devin Nunes, a big time free market guy who does make sure grower subsidies arrive without interruption.
Sure, Tulare has one of the highest unemployment rates (8.4%) in the state and could be hit bigly by tariff retaliations. One hitch: there are plenty of people there with names like Ocasio and Cortez, a perhaps frightening scenario for someone who worries about such people looking for a “free” job.
Addendum: Those with names like Ocasio and Cortez and seeking all that “free” stuff in California’s Central Valleys. Sure.
It will be over 100 degrees Monday in most of the valley’s agriculture areas. That’s most of the valleys, for those who have no clue or who somehow believe California consists of million dollar homes located in the Bay Area and Beverly Hills.
In Tulare County, there are about 53,000 employed in the fields and on farms and ranches. Next door in Kern County (where the likely next House Speaker resides) there are another 90,000 doing the similar work.
Not sure why these workers, more than a few who are undocumented, will be toiling since there since they’re eligible for so many freebies, as mentioned by PT.
It’s a mystery. Especially since Tulare County’s number one export is connected to its dairy industry. Those laboring there must not realize they can simply sit around and get all that free medical care, education, et. al. without having to earn anything.
Noneconomist, it’s Hispanics to you. It’s socialism to me.
But, you view everyone only by race.
That’s what’s frightening.
If you’re Hispanic, you believe in socialism? Huh?
Why are so many Hispanics working in the Central Valleys (both north and south) when they can, in your “enlightened” view, be sitting around collecting free stuff?
Yeah. I”M the racist.
BTW, PT: I’d like to see the valleys get by without their traditional farm labor and farm laborers, most of whom are Hispanic.
But just wait until they find out they don’t need to begin work before sunup and can replace their 100 degree days in the fields and on the farms and ranches with free stuff.
You’re a riot Alice, a regular riot!
And I’M the racist!
Found this over at FT Alphaville. Not sure what to make of it yet, but it seems like a major issue at first glance. If they hold large amounts of foreign assets I would think there would be some ripples outside China. Or maybe that’s already been accounted for in the markets since it’s a cumulative number?? Like I said, not sure what to make of it.
http://www.chinabankingnews.com/2018/06/29/250-chinese-investment-funds-liquidated-first-half-exceed-closures-2014-2017/
So Trump has decided to give even more government subsidies (we can’t call this what it is, government welfare) than we already do to U.S. farmers. What happened to Republicans’ whole “free market” deal??? Isn’t this what Republicans call the “redistribution of income”?? When did Republicans decide to sign on to and applaud the redistribution of income??—>>when they figured out it was a regressive tax from the working man to farm conglomerates??
https://www.agriculture.com/news/business/can-usda-stretch-corn-soybean-farmers-safety-net-with-tariff-relief
Of course, all bets are off going forward, as California is a steel using, export oriented state, and Mr. Trump seems intent to damage both of these sectors.
And then we learn that Trump wants the US to get out of the WTO:
https://www.cnbc.com/2018/06/29/trump-reportedly-wants-us-to-withdraw-from-world-trade-organization.html
What an idiot.
‘Axios is reporting that Trump has told several top White House officials he wants the United States to withdraw from the World Trade Organization. Axios says Trump’s aides push back when he talks about withdrawing, but four sources said they’ve never put in place a policy process to take the idea seriously.’
What does one expect from the Three Stooges (Kudlow, Ross, and Navarro)?
2slugs, actually this is a ploy by trump, his mo if you will. trump believes he will outfox you in a chaotic environment. so he intentionally threatens a dumpster fire in the hopes the other side gets rattled. in this situation, he feels he can get the rest of the liberal and free trade world in a frenzy with the wto commentary. i would imagine he feels he can get a better “deal” in negotiations under such conditions. what the chaos president does not understand, or is willing to accept, are all the losses imposed on regular folks while he imposes his chaos theory. steel tariffs are an example. unfortunately, most of the regular folks who support trump do not appear to be intelligent enough to understand how they are being damaged, both in the short term and long term.
Baffled: ” in this situation, he feels he can get the rest of the liberal and free trade world in a frenzy with the wto commentary. ” Well, he certainly got the usual suspects here at econobrowser in a frenzy.
CoRev – before another one of your whiny little comments, read the following slowly. And then read it again another 50 times:
‘Axios is reporting that Trump has told several top White House officials he wants the United States to withdraw from the World Trade Organization. Axios says Trump’s aides push back when he talks about withdrawing, but four sources said they’ve never put in place a policy process to take the idea seriously.’
Anyone, who isn’t skeptical of unnamed sources is an “idiot.”
PeakTrader So does that mean you’re going down on record as agreeing that we should stay in the WTO and withdrawing from the WTO would be idiotic? I just want things for the record in case Trump does want to withdraw. You Trumpsters have a way of framing and reframing your ideas to fit Trump’s latest outburst. So how about it, can we put you down as supporting WTO and opposing any effort to withdraw from it?
2slugbaits, firms all over the world have complained for many years about unfair trading. Yet, it still goes on. The WTO can be improved. A fair trading system is needed in the global economy.
You didn’t exactly answer the question. How about a simple yes or no.
Can’t answer the question. What’s the matter. Is WILBUR Ross refusing to take your call? Until he gives you your latest marching orders, keep ducking this question!
2slugbaits, I’d replace the WTO with something better, like replacing a free trade agreement with a better one.
“2slugbaits, I’d replace the WTO with something better, like replacing a free trade agreement with a better one.”
PeakWeakKnees! This is like Romney’s Repeal and Replace. Peaky has no clue what “a better one” even means. Which is OK as Team Trump does not have a clue either.
“2slugbaits, I’d replace the WTO with something better, like replacing a free trade agreement with a better one.”
that is not answering the question. it is posing a hypothetical solution which cannot be achieved. lets keep our responses in the real world, eh?
PeakTrader Still didn’t answer the question. According to Axios Trump didn’t ask his staffers to replace it with something better; he told his staff that he wanted to withdraw from it. Why can’t you give a straight answer to a simple question. If Trump decided he wanted to withdraw from the WTO would you oppose Trump’s effort to withdraw or not? No need to obfuscate, just a simple yes or no.
You cite shady and unnamed sources routinely. We agree on something! You are an idiot.
Pgl, as I said the WTO comment has the usual suspects up and spinning. It’s amazing to watch you folks.
Over at EconomistView, a post ala Paul Krugman notes US soybean prices are falling while what we pay for steel is rising. I know old news but the comment section is a riot. So know nothing gold bug who wants to pretend he is a socialist (go figure) thinks Krugman is stooopid as Krugman is not hyping for higher tariffs on imported cars. Yea I know – the concept of the Effective Rate of Protection is lost on that ground.
Re: Contrasting abilities in economics
Over the last couple of days we’ve heard the usual crowd getting riled-up over a “socialist” winning a Democratic primary. What’s funny is that we’re hearing this from folks who have no formal training in economics and pride themselves on never having read a economics textbook. But yet they see themselves as having econ cred. Meanwhile, this “socialist” actually has studied economics at Boston University.
But it gets better. Trump’s “economic advisor” Larry Kudlow, who doesn’t even have an undergraduate economics degree, just told the world that the deficit is shrinking in the wake of Trump’s tax cut even though both CBO and the Treasury say it’s increasing.
https://www.cbsnews.com/news/trumps-top-economic-adviser-claims-the-deficit-is-going-down-the-cbo-and-treasury-disagree/
Why are there so many ignoramuses in Trump World who are manifestly unqualified to discuss economics, but yet think it’s so horrible that a “socialist” (whatever that means) who actually understands economics could win a primary election.
The socialist community organizer represents a poor immigrant district. All you have to say is “free” and they’ll vote for you.
PeakTrader: “…represents a poor immigrant district.” So immigrant == freeloader? Not even subtext here…
Menzie Chinn, many of those immigrants seem to believe in socialism.
Many of them respond to free healthcare, free education, free housing, free jobs, etc..
Of course, not all poor immigrants are freeloaders.
“many of those immigrants seem to believe in socialism.”
Really? Given you run and hide whenever someone not white even walks down the street – how would you even know what they believe? Oh wait – WILBUR finally called you and dictated that you write this nonsense.
“Of course, not all poor immigrants are freeloaders.”
wealthier immigrants can also be freeloaders. peaktrader is a prime example, still collecting his social security and medicare benefits while he tries to crush the immigrants following in his footsteps.
PeakTrader I don’t know where you learned about socialism (high school maybe?), but it’s pretty uninformed. If you want to argue against socialism, then you should at least make the effort to learn what it is and what it isn’t. As a primer you might want to give this one a read:
https://www.amazon.com/Essential-Works-Socialism-Irving-Howe/dp/0300035713
At least you’d be able to comment intelligently on the subject. Just a free service I’m providing you in my continuing effort to improve your understanding.
2slug,
Once again, political expression obfuscates communication. I grew up in the only major U.S. that I’m aware of having a long history of socialist mayors (although Minneapolis has one for a couple of years a century ago). As major cities go, it was always considered something of a provincial backwater, but it was pleasant. Everything was centered around the community. The north side was German; the south side was Polish. Parks were small and neat. Schools were basic. Commerce centered around heavy industry. Not a lot in the way of financial business beyond local banks and an insurance company. There were a couple of wealthy families, but no concentration of wealth. You could have been in Europe.
If the rest of the country’s major cities were built around that model, the U.S. would be a nice, provincial, backwater country that plugged along, had it’s festivals, made some nice, but expensive, products and pretty much ignored everything else and expect everyone else to ignore it.
That’s not a bad outcome, but it’s not a fantastic one either.
Hey Melania Trump was an immigrant. But the Trumpsters like Immigrants from European nations as they are white.
If a person was to believe the Republican propaganda and Rupert Murdoch propaganda machine, it was Bernie Sanders who was “running around offering everyone ‘free’ things” This shows a deep lack of knowledge on PeakIgnorance’s part, as if that was the case, one would assume those areas (Queens and Bronx) would vote overwhelmingly for Sanders. Until Hillary figured out she was bleeding off votes to Sanders open machete-wound style, she was berating him over offering University students free education. All you have to do is glide your mouse over the map to find the districts.
https://www.nytimes.com/interactive/2016/04/19/us/elections/new-york-city-democratic-primary-results.html#11/40.7282/-73.9233
It’s overwhelmingly blue in Bronx and Queens and only starts to get semi-green in the Brooklyn and Staten Island areas.
What does that tell us?? It tells us Ocasio-Cortez didn’t win the vote because she was a socialist Democrat. Ocasio-Cortez won the vote because she got her sexy little butt out there and hustled for her votes and campaigned in a sharp-minded manner while Joe Crowley was sitting at home, fanning himself while his cronies and Wall Street pals told him what a great guy he was.
The national media has either shown a profound ignorance over this or an attempt to manipulate the context of the Ocasio-Cortez victory as well, as media outlets are trying to make this into a “is the party tilting to the left??” issue. Any idiot looking at it can tell you—Ocasio-Cortez was a better candidate and campaigner in a purely binary choice between her and Crowley, PERIOD, END OF “ANALYSIS”
Paul Ryan is the master of the free lunch. But it is a free lunch for rich white dudes who hang in the Hamptons.
How clueless are you. We are talking about a district in MY city – New York City. FYI – even the poorest people here make a lot more money than you would manage to rake in with a real market based job. So keep on writing copy for Team Trump as we would not want to see homeless in the Bronx!
“As the economy gears up, more people working, better jobs and careers, those revenues revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly,” Kudlow told Fox Business’ Maria Bartiromo, who did not appear to challenge him on that statement. “Growth solves a lot of problems.”
Let’s be fair to Larry. That is what he had hoped would happen. It is also what certain Team Republican “economists” predicted would happen. Never mind no sensible model would lead to these forecasts. Never mind the real world data is showing that these optimistic forecasts have all fallen short. Larry still believes it is happening as that what he had hoped. He also believes the unicorns, the tooth fairy, and Santa Claus!
larry is simply practicing trump speak. repeat a statement loudly and proudly, even if it is wrong. continue repeating until your loyalist believe it to be true. then it gets repeated on sites like this by his apostles peaky, corev, bruce, ed and others of similar ilk. we have seen repeatedly, these folks have absolutely NO PROBLEM claiming a false statement is true in order to further their ideology. sad, really.
Baffled in action, read his comment and remember his previous many. 😉
corev and peaky may both be bots, based on the silly responses they make.
@ 2slugbaits
5-star comment. If our panelist of judges could give it 6-stars they would but it’s against the committee format.