The Breakdown

Explaining Southern California's economy

CA unemployment rate falls to 9.8%, lowest in 4 years

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44338 full

California's unemployment rate has finally fallen back into the single digits, for the first time since January 2009. The Labor Department reported Friday that the Golden State's jobless rate for November was 9.8 percent, down from October's 10.1 percent.

Economists had been expecting California's rate to break the psychologically important 10 percent barrier, but it's still exciting to see the day arrive at last when the state can now look at the national unemployment rate — 7.7 percent — and see a smaller gap to close.

California has been adding jobs a nice clip all year. In November, according to the Labor Department, the state's over-the-year total, 268,600 jobs added, was second only to Texas. And not by much: Texas has added 278,800 jobs since last November.

These aren't spectacular numbers. But in the context of a weak recovery, they're worth noting.

The November 9.8 percent California unemployment rate is cause for brief celebration, but the fiscal cliff still looms. However, the U.S. economy grew faster in the third quarter than initially thought: Gross Domestic Product, as the Commerce Department reported Thursday, expanded at 3.1 percent. That was revised up form an earlier estimate of only 2 percent.

If that pace continues into next year — and it's a big "if" — California should continue to see its  unemployment rate fall.

However, if the economy continues to improve, another short term possibility will enter the picture. Workers who had effectively dropped out of the workforce, discouraged by their prospects, could come back. Economist call this the "labor participation rate," and nationally it is at lows not seen since the early 1980s. 

If workers reenter the workforce, enticed in California by a combination of our enormous, diversified, nearly $2 trillion economy (it's like the economy of an entire country and is the biggest of any U.S. state), that 9.8 percent unemployment rate could actually rise. 

But if that happens, it would be good news: a sign of improving health rather than worsening sickness.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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