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Pasadena’s Unemployment Rate Nearly Halved Since May, But Still Double Pre-Pandemic Rate

Some experts fear ‘overheating’ economy as society reopens

Published on Monday, April 5, 2021 | 11:12 am
 

Pasadena’s unemployment rate shrank by half since peaking in May, according to February statistics, but still remained at more than double the rate seen in February of 2020, just before the COVID-19 pandemic exploded in the state.

Data provided by the California Employment Development Department shows an 8.7% unemployment rate in Pasadena for February. That’s down from a maximum of 16.8%, reported in May, which represented a quadruping compared with May of the prior year.

But the rate in February remained more than double the 3.9% unemployment rate documented in February of 2020, just before the pandemic reshaped the local and national economy.

A similar trend was seen at the county level, according to EDD data.

After peaking at 21% unemployment in May, Los Angeles County’s jobless rate was recorded at 10.9% as of February, according to the EDD. But the rate remained more than double its level in February of 2020, which was recorded at 4.6%.

The statewide unemployment rate for February was 8.5%, while the national rate was recorded at 6.2%.

As pandemic restrictions have gradually lifted in recent months, some of the industries hard hit by them have been working to recuperate, EDD Labor Market Consultant Juan Millan said.

At the county level, “We are seeing strong rebound in restaurants and food services and drinking places,” he said. “We are seeing that more establishments and restaurants and drinking places are beginning to reemploy individuals that are preparing for the surge in employment county-wide.”

“Eighty-two percent of the jobs gained County-wide were in accommodation and food services, which includes restaurants and drinking places,” Millan said.

Although on the whole, leisure and hospitality industry employment in L.A. County was still down 32% over the prior year, he added.

Among industries still struggling to make a comeback are the motion picture and sound recording, as well as business services.

“Motion pictures and sound recording lost 59,600 over the year [and] have recovered just 21% of the jobs lost during the pandemic,” Millan said. “And we haven’t seen the expected resurgence in this industry, and this is a very relevant issue in Los Angeles County because it extends to other industries such as food services and security services that are reliant on this very relevant industry in Los Angeles County.”

An economic forecast release last month by the UCLA Anderson School of Management predicted a continued shrinking unemployment rate.

“We forecast that the unemployment rate will decline from an average of 6.7% in Q4 2020 to 5.2% in Q4 2021, 4.1% in Q4 2022, and 3.7% in Q4 2023,” the report stated. “Recovering labor force participation will slow the decline in the unemployment rate.”

Pasadena Economic Development Manager Eric Duyshart said he was also enthusiastic about the potential recovery in the months ahead.

“At City Hall, we sense a general optimism among the broader business community,” he said.

“There is pent up demand for a variety of goods and services that will help lift the economic tide,” Duyshart said. “People are eager to go out, spend some money, visit with friends and have some fun. Pasadena is a great place to do that.”

While some new businesses have opened in town during the pandemic, “the unemployment numbers have dropped mostly as a result of businesses hiring back employees and refilling laid-off positions now that we’ve entered less restrictive tiers for reopening,” he said.

“Pasadena is fortunate to have local resources available, including Pasadena City College and the Foothill Workforce Development Board, which can help individuals looking for employment programs and skill building opportunities,” Duyshart added.

But Economist William Yu of the UCLA Anderson School of Management warned too much growth too quickly could have unintended consequences.

As long-dormant commerce reawakens, there is a concern of the potential of a “overheating economy,” which will lead to high inflation, he said.

“Everybody with an income of less than $75,000 got a $1,400 check on top of what we already got last year. So those kinds of things will contribute to the consumption, and will contribute to GDP growth. That is moving [us] away from high unemployment or kind of potential recession,” according to Yu.

At the same time, “If the inflation really reaches, say, 3% or above 3%, then maybe the federal reserve will try to cool down the economy by raising the interest rate,” he said.

Related:

Pasadena’s Unemployment Rate More Than Quadruples to 16.8 Percent

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