After getting pummelled exceptionally hard during the crisis, California is now the nation’s top job creator for the 2nd month in a row, surpassing Texas, as Bloomberg reports.
Why is that the case? Is it some policy change?
No. It’s just about housing.
Here’s a nifty little chart we just made to demonstrate the point nicely.
The red line is the national unemployment rate divided by the California unemployment rate. In other words, when California is doing worse than most of the nation, the line goes down. When California is outperforming the nation, the line goes up.
The blue line is Western Region Housing Starts * San Francisco Case-Shiller * Los Angeles Case Shiller. Basically a blend of housing datapoints that most encompass California.
Notice anything? Yeah, for a long time, California’s relative performance on the employment front has been a function of housing.
When the California housing index (which again is a measure of housing starts and prices) goes up, California improves relative to the nation. When it all collapsed, California’s employment prospects collapsed.
Now that housing is coming back, California once again has the hottest jobs market in the nation.