California's Timid Recovery Seems To Have Stronger Legs

Fears that California's recovery has stalled appear to be exaggerated, contends economist David Hensley at Salomon Brothers Inc. Based on a forthcoming revision of state employment data, he predicts that the jobs picture for 1993 and 1994 will look decidedly more upbeat than the current numbers that show scant gains this year since employment hit a trough last December.

The problem is that California counts jobs created by new businesses only after it is able to verify them through actual payroll tax payments. A recent preliminary review of such payments through March of this year erases much of the job losses last year and shows a healthy pickup in February and March of this year. It indicates that the original employment count over the 12 months ending in March may have missed as many as 220,000 jobs.

Even if the final upward revision is less buoyant, says Hensley, "the new data confirm the view that the Golden State is in the early stages of a slow but broad-based expansion."

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