The unemployment rate in California has been declining at a faster pace than the nation. Compared to the stateaEUR(TM)s peak unemployment of 12.4 percent in 2010, the unemployment rate has now dropped by about 2.3 percentage points. During the same period, the unemployment rate in the U.S. dropped by only 1.6 percentage points. While unemployment rates in California are still higher than the national average, this has been true even during economic booms. PPIC studies show that even during the technology boom of the late 1990s, CaliforniaaEUR(TM)s unemployment rate was higher than the national rate, but employment growth was also higher. One key reason is the stateaEUR(TM)s growing population and labor force. Over the last five years, CaliforniaaEUR(TM)s labor force grew by about 2.1 percent, while the national labor force grew by only 1.1 percent. CaliforniaaEUR(TM)s economy generates jobs at about the same pace as the national average, but the faster-growing labor force and population keep unemployment rates at higher levels than the national average.
One important area of the California economy has now surpassed the pre-recession employment levels. The professional, scientific, and technical services sector continues to be a dominant driver of the economy and an important source of new jobs. The Milken InstituteaEUR(TM)s 2011 Technology and Science index ranked California as one of the leading states, with top marks for R&D, risk capital and entrepreneurial infrastructure, and the concentration of tech industries in the state. The California metros also hold three of the top 15 spots in the latest Kauffman Index of Entrepreneurial Activity, where the Los Angeles area tops the chart with 580 entrepreneurs per 100,000 people. The strong performance in entrepreneurship suggests that despite apprehensions about CaliforniaaEUR(TM)s business climate, the state is still a popular location for starting businesses.
Many of the stateaEUR(TM)s high-tech industries are located in the San Francisco Bay Area, which lead the state in the economic recovery. San Francisco and San Jose lead with 2.9 and 2.5 percent gains, respectively, in non-farm jobs from September 2011 to September 2012. Los Angeles saw a gain of only 1.8 percent, less remarkable than the Bay Area but still beating the national average of 1.4 percent. The Bay Area continues to report a robust growth in jobs, as 8,800 jobs were added to the area in October. San Jose already leads the nation in advanced manufacturing, with about two out of five jobs in the area support the industry.
A recent Forbes study highlights the strengths in CaliforniaaEUR(TM)s overall economy:
• CaliforniaaEUR(TM)s $2 trillion economy still puts it as the ninth largest in the world, representing 13 percent of the U.S. economy.
• Over the next five years, the stateaEUR(TM)s economy is expected to grow 3.6 percent annually, one of the highest growths in the nation.
• Forecasted job growth ranks in the top for the nation.
• California represents 10 percent of the 1,000 top largest U.S. public and private companies.
All in all, California is more than a coastal state with nice weather; it is a state with a bright economic future.