The job markets in California and the United States may have hit bottom this year, separate reports released Friday suggest. But worse-than-expected weakness during 2009 for California employment may make the climb to recovery far longer.

California added 32,500 payroll jobs during January, state labor officials reported Friday. The statewide jobless rate rose to 12.5 percent, matching a previous record level reached last year.

In February, the U.S. lost 36,000 jobs and the U.S. unemployment rate remained at 9.7 percent, government analysts said.

The nationwide payroll job losses in February weren’t as severe as experts had expected. Researchers also had predicted the U.S. jobless rate would rise slightly.

The U.S. results cheered Wall Street. The Dow Jones industrial average rose 1.2 percent, while the S&P 500 Index jumped 1.4 percent.

Still, other results from the U.S. report raised warning flags. Chief among them: The total unemployment rate, which includes discouraged workers and people forced to hold part-time jobs, hit 16.8 percent, up from 16.5 percent. Plus, the average number of workweek hours declined.

For California, economists focused on a huge revision in the 2009 statewide job totals, which showed the state’s employment base had eroded to a greater extent than initially thought.

“This was a huge downward revision,” said Jeffrey Michael, director of the Stockton-based Business Forecasting Center at the University of the Pacific. “This adjustment was exceptionally large.”

 

The revised figures showed that during 2009, California lost 836,000 payroll jobs. Prior figures from January disclosed a statewide job loss in 2009 of 579,400 payroll jobs.

That means California lost 257,000 more jobs than initially thought. This newspaper reported earlier this week that a major downward revision in the job totals was expected.

One big factor behind the revision is California had fewer businesses and other employers than first projected. That, in turn, reduced the size of estimated payrolls statewide.

“We are now at a lower bottom,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “We have hit bottom, but we have a longer climb out. More people than we thought are going to need jobs.”

Case in point: At the rate of 32,000 new jobs a month, it would take eight months for California to make up the additional 257,000 in job losses that were discovered through the revisions.

Even worse, the nation and California could tumble back into a fresh economic nose-dive, warned some analysts, including Christopher Thornberg, partner and economist with Beacon Economics.

“There is a substantial chance of a double-dip recession,” Thornberg said.

Why does a renewed downturn menace the wobbly economy? The end of federal stimulus efforts — whose benefits remain elusive and tough to quantify — could batter the economy before it can revive.

Plus, the Federal Reserve may remove a program that has kept mortgage rates low, a move that could make home loans less affordable.

“We’re at the bottom now right now, but when the stimulus wears off, things could get worse,” Thornberg said.

Other researchers also warned of a second U.S. recession, which would make three in a decade if such a downturn were to materialize this year.

“Eight months into the much touted recovery, the economy should be adding jobs — not losing jobs at a slower pace,” said Peter Morici, a professor with the University of Maryland. “In an economic recovery, jobs are a lagging indicator, not a never indicator.”

The federal government’s stimulus spending and moves to prop up struggling banks have failed to turn around the economy, Morici said.

“No study of economic history could yield a conclusion other than that the U.S. economy walks along the precipice of a double-dip recession,” Morici said.

More information about the state of the economy is due next week, when the state Employment Development Department releases revised job numbers for local regions, including the Bay Area’s urban centers. The numbers should include revised figures for 2009 and monthly job trends for January.

In the Bay Area, employment losses are expected to be worse than first thought. During 2009, the nine-county region shed 126,000 payroll jobs, EDD figures show. That includes a loss of 116,000 private-sector positions.

“It’s going to take much longer to get a recovery for job totals, personal income, taxes and state revenues,” Levy said.

Contact George Avalos at 925-977-8477.

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