Madison Aument
With 91.9 KVCR News, I'm Madison Aument. This is Economics IE where we talk to economists from the Inland Empire to help take the temperature of the region's economic situation. Today I'm speaking to Dr. Manfred Keil, who's an associate director with the Lowe Institute at Claremont McKenna College. Thanks for being here. Manfred.
Manfred Keil
Thank you so much for having me, Madison.
Madison Aument
Well, let's talk about the job numbers. The employment report from the state's Economic Development Department for January is out. So what do the numbers say?
Manfred Keil
Yeah, so it comes out typically in the middle of the month, and we're obviously not in the middle of the month. Except for one time in the year, which is now in March. What they do is they do a big data revision. And so instead of reporting on February, currently, they're reporting on January. So two things happen today, we get the national data release, and we get the state and local data release. And so for the whole US economy, it's fine. The unemployment rate went up a little bit from 3.7% to 3.9%. But that's not really a lot. And overall hiring was still very strong. So now we get to the state and to the most importantly for us, the Inland Empire. California now has the second highest unemployment rate in the US, we have not returned to the employment level that we had in February 2020. Why am I picking 2020…February? Because in March, basically the Coronavirus recession starts. Right? So the previous peak of economic activity is the one to compare us to. And there, for the state of California, we have not reached employment levels, nor have we reached labor force levels. So labor force is employed and unemployed people. And here comes the good news. On the other hand, in the Inland Empire… So the Inland Empire sort of has been, as far as I'm concerned, the poster child of the recovery. If you look at the numbers that were released by the EDD, it will say the unemployment rate went up by half a percentage point. That's a lot, like from 5.1% to 5.6%. But here's the thing, when they release numbers, they do not seasonally adjust them. It turns out every year, generally, unemployment numbers are higher than in December. And that's because, you know, there's their seasonal employment, think of Christmas shopping. And in January, these people are being laid off. So we have statistical filters to get rid of that. And when we do, the unemployment rate in the Inland Empire actually fell by 0.1 percentage points. The sectors that are most suffering at the moment in the EDD data are the ones that you would expect to suffer when you have seasonal employment changes such as retail. It's leisure and hospitality. When you adjust the numbers. The employment report actually just looks fine.
Madison Aument
Can you talk a little bit more about why we're the poster child of the recovery?
Manfred Keil
So we're the poster child of the recovery because this was a strange recession different from the others. It was the Coronavirus recession. Right? And so what happened during the Coronavirus recession and the recovery is that people really switched to home deliveries. What did I order from, well, the typical company? I even ordered washing powder. I ordered mayonnaise. All in one delivery. What'd I do before I would go to a grocery store and buy that right? And now instead it's getting delivered to me to the house. And that's it. So who benefited from that? Logistics, and we are the logistics center of the world. And so everything that has to do with logistics, which is transportation, warehousing, and wholesale, everything in that sector has boomed. That boom, sort of lasted until last summer… summer a year ago.
Madison Aument
So did these numbers indicate anything moving forward?
Manfred Keil
They indicated that logistics is still not doing very well compared to its peak it had, right? And the peak in the summer of 2022 was still better than February 2020. But the encouraging part is now that there are some other sectors, in particular health and education, that are picking up. And that's an encouraging one because jobs and health and education are better paying than in the logistics industry. Right, so that another encouraging sign out of the report that we got this morning.
Madison Aument
So what's your main takeaway from this report?
Manfred Keil
The main takeaway is do not look at the headline news that will say in the Inland Empire. The unemployment rate went up by half a percentage point because that's a lot. Simply say this is like a child that has a cold and you know that during the day the temperature will go up… in the evening it's going to be higher. That's the same thing. What we've seen with these employment numbers at the moment, they're just the result of the season of the year. You filter that out, and you're not that concerned. And it turns out actually that the unemployment rate went down slightly.
Madison Aument
Thank you for joining me today, Manfred.
Manfred Keil
You're welcome is a pleasure.
Madison Aument
Join us again next Monday for Economics IE. You can find this segment on our website at kvcrnews.org/econie. Support for this segment comes from the Nowak Family. For KVCR News, I'm Madison Aument.