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Jobless Rate Could Worsen Before Improving

ECONOMY: Troubling Economic Data Contained in June Employment Report

San Diego Business Journal Staff

San Diego’s job picture continued to look bleak as it moved into double digit territory last month, generating conflicting opinions as to when the local economy would turn around.

“A lot of the pain and a lot of the job losses are behind us,” said Marney Cox, economist for the San Diego Association of Governments, the region’s planning agency. “The question is how long will we remain at the bottom of this trough before things pick up.”

Alan Gin, an economics professor at the University of San Diego, said the most recent jobless report that showed San Diego’s jobless rate of 10.1 percent contained troubling data.

Two sectors that normally generate jobs continued to show weakness, he said.

While the leisure and hospitality sector added 1,800 jobs in June compared to last year, the industry has contracted by 8,000 jobs, as hotels, restaurants and recreation businesses take a cautious approach to staffing.

Professional, scientific and technical services, another sector that could be counted on to generate between 3,000 to 4,000 new jobs annually, lost 800 jobs in June and was down by 1,600 from June 2008.

Cox also pointed to the region’s tech and biotech companies as not faring as well, and doubted the sectors would have much of an impact in terms of job creation as during the last big recession in the early 1990s.

Cox said the continued pull back in venture capital investment was having a negative effect and contributing to the job declines.

San Diego’s June unemployment rate of 10.1 percent was up by about a half percent from May, according to the state’s Employment Development Department. However, it was the highest rate since the EDD revised the way it calculated unemployment in 1990.

In June 2008, the area jobless was 5.9 percent.

In comparison, California’s rate was 11.6 percent, and the national rate was 9.7 percent.

“We didn’t hit this level of unemployment in the last recession of the 1990s, which was pretty bad for us,” Cox said.

Gin said the local economy wouldn’t bottom out until the end of this year, and that unemployment will likely rise to between 11 and 12 percent.

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  February 8-14, 2010
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