As I wrote on May 26, California's Great Recession likely will begin "in earnest" in July 2009. In addition to the warning signs noted here in the previous 13 posts, additional information is available to us both in the form of statistics and anecdotally.
Few California cities have been spared the deep impact of a large layoff during this recession. And it's still getting worse. So far this year, companies are laying off workers twice as fast as they did during the same period of 2008.
The U.S. Department of Commerce reported that in May the U.S. trade deficit fell because exports gained slightly while imports dropped for the 10th straight month. Unfortunately for California, exports from the state fell dramatically for the 7th straight month, down 25.2% from last year. Manufactured exports were down 28% while agricultural and other non-manufactured exports were down by 23.3%. Year-to-date exports are down by 31% or $13.5 billion in five months. (Data from the Sacramento Bee.)
Adding to those dismal statistics is the drop in imports going through California's ports. Imports in May were down 31.7%.
The problem with both these indicator statistics is that they lag behind the rest of the economy. They are based on orders placed months ago. It is likely that these numbers will continue to drop well beyond when the national economy hits bottom.
This means that California's normally busy ports will remain not-so-busy for some time. In April it was reported that cargo leaving the ports of Los Angeles and Long Beach was off 18 percent and exports from San Francisco International Airport were down 34 percent.
While it is likely that in the long term, the ports will see as much of a recovery as the national economy allows, this will not be true for one of California's most famous "export" businesses - film and television production.
The Los Angeles Times reported recently that according to the "Employment Development Department, jobs in movie and television production were down 13,800 in May compared with a year earlier." In addition to reporting the effects on individuals, the article reported the following:
Part of the problem is competition from other states that offer special tax benefits. But the other part of the problem is that because of high living costs, the cost of doing business in California is also high.
California's share of U.S. feature film production dropped to 31% in 2008 from 66% in 2003, according to the California Film Commission. That largely reflects a falloff in the Los Angeles area, where feature filming activity in 2008 was nearly half what it was at its peak in 1996.
Television production, which recently has been a more reliable source of jobs in the region, is also declining. A recent survey from Film L.A. Inc. found that 44 of 103 TV pilots this year were shot in such disparate locations as Canada, Illinois, Georgia, New York, Louisiana and New Mexico.
It is unlikely that the California film and TV production industry which used to produce exports from this state will rebound from this migration to other states.
These accumulating facts represent the reality that the Legislature and Governor, and the schools and local governments, and the taxpayers all seem to be ignoring.
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