Explaining Southern California's economy

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

Job Seekers  Meet With Recruiters At Job Fair

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Job seekers wait in line to enter a California job fair. The state's unemployment rate fell to 9.8 percent in November, down from 10.1 percent.

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.


Short sale boom: Maybe in California, but not in the rest of the U.S.

A short sale home in the Spring Valley a


A short sale home in Las Vegas. An expected short sale boom in the U.S. hasn't materialized, according to the National Association of Realtors. But in California, short sales have been on the rise.

If you’re underwater on your mortgage, you might want to consider a short sale, asking the bank to take less that what you owe. Some real estate experts thought a boom in short sales might appear at the end of 2012. But the National Association of Realtors says that hasn’t happened.

Why? It all comes down to the fiscal cliff. In addition to tax cuts and stimulus spending, something that might also go away is the Mortgage Forgiveness Debt Relief Act.

It expires at year’s end and if Congress doesn't extend it, short sellers could face an IRS tax bill for the forgiven portion of their mortgage. But on Thursday, the president of the National Association of Realtors, Gary Thomas, pointed out that there’s been no short sale boom. Short-sellers haven't been rushing to beat a possible fall off the cliff.


Moody's raises a red flag about November California tax revenues

CA Governor Jerry Brown Holds News Conference On Pension Reform

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California Gov. Jerry Brown discusses pension reform during a news conference in Los Angeles. The state's revenue outlook deteriorated slightly in November.

The tax revenue outlook for California has been improving. But Moody’s, the big credit rating agency, reported Friday that the take for November was lower than expected. 

The agency wasted no time is raising a red flag about the sudden reversal of a positive revenue trend. November came in 11 percent lower than the state’s budget called for.

Emily Raimes, a Moody’s analyst with whom we've talked before at the DeBord Report, pointed out that the shortfall highlights the volatility of California’s tax revenues — a point I've been droning on about for months now. In the state, we're overly dependent on the incomes of the rich to make the budget work.

This is something that Raimes says Moody’s “sees in states with high wealth.” The same issue arises in New York and New Jersey. 

"California’s progressive income tax structure fuels the volatility; the wealthiest 15% of state taxpayers pay approximately 80% of all state taxes, according to the state’s audited financial reports," she wrote in a contribution to Moody's Weekly Credit Outlook.


November home foreclosures: California and Florida switch places

Reed Saxon

A foreclosure sign at a home in Pasadena. The foreclosure situation in California is improving, reports RealtyTrac.

When it comes to November's foreclosure activity, California and Florida have switched places, real estate analytics firm RealtyTrac reports. But the two states still have a lot in common when it comes to real estate woes.

Nationwide, 16 of the top 20 cities for foreclosure activity are in California  or Florida, said RealtyTrac. Both states have cornered the entire top ten for cities with populations over 200,000. 

But for a change, California is in the bottom three (Riverside-San Bernardino-Ontario, Stockton and Modesto), while Florida took the top seven spots. As recently as August, Modesto was the number one city for foreclosure activity in the U.S.

In November, the Palm Beach-Melbourne-Titusville metropolitan area led the list. There, one in every 158 homes faces foreclosure.

Foreclosure activity declined year-over-year in all of California’s top 10 cities, while in Florida, it increased. But overall in California, foreclosure rates are still among the country’s highest, with one in every 430 homes receiving a filing in November. 


Fresh & Easy's competition problems in California

Tesco Opens First Of Its "Fresh & Easy" Stores In L.A

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This was one of the first 16 stores that Fresh & Easy opened in the U.S., and this was — and still is — in Los Angeles. But now the British-owned chain, after a $1.6 billion investment, will likely leave the U.S. market or see its parent, Tesco, sell it.

The L.A. Times reported last year that Fresh & Easy, a relatively newly arrived grocery chain owned by Britain's Tesco, would be closing stores in the U.S., including seven in California.

At the time, the LAT quoted a Fresh & Easy spokesman who said that it would continue to grow in the U.S.:

Despite the store closings...Fresh & Easy will maintain a brisk pace of expansion, with an average of 50 stores opening per year.

More than two dozen new stores will open their doors through March, including seven smaller-format Express stores in Los Angeles and Orange counties and five stores in Sacramento.

KPCC Business Reporter Wendy Lee filed a story Thursday that suggests those plans have changed. And the Wall Street Journal has a long story about how Fresh & Easy is a $ 1 billion-plus debacle for Tesco and quotes Clarke declaring that it's "likely, but not certain, that our presence in America will come to an end."