Which of the PPIC Delta alternatives is most like the Economic Sustainability Plan?

Critics are calling the Economic Sustainability Plan a status quo plan.  That isn't right, but I understand how it can be misperceived since it is starting with the Delta economy and it's goal is to determine the best future for the Delta (that is consistent with the state's "co-equal goals" of water supply reliability and ecosystem restoration).

For California water wonks, it might be easier to see the ESP's recommendation through the familiar framework developed by the PPIC.  I recommend everyone go back and read chapter 8, Evaluating Delta Alternatives, of the 2007 Envisioning Futures PPIC report on the Delta.  Before reading further in this post, open up chapter 8 in another window, and go to Table 8-2, pages 166-167.

Make 2 adjustments to Table 8-2 for things that have changed since 2007.  First, go to alternatives 4 and 5, cross out costs of $2-3 billion and replace it with $12-15 billion since the estimated costs of isolated conveyance alternatives has gone way up since 2007.  Second, due to the co-equal goals being state law, you can rule out alternatives 7 and 8, because the water supply is way too unreliable for current law.

With those 2 adjustments, any reasonable person viewing the Delta problem and accepting this framework has to go back and take a much harder look at alternative 2: Fortress Delta (Dutch Standard), as well as alternative 6.

The recommendation in the ESP is not status quo (that is alternative 1).  It is most similar to alternative 2 with some significant environmental enhancements that should total less than an additional $1b (think BDCP with less tidal marsh and some compromise solutions on flood/fish bypasses). 

When you go to Table 8-3, you see alternative 2 was primarily rejected due to "great expense."  We are arguing that you could get an environmentally improved version of alternative 2 for an economically feasible $5b or less, as opposed to the current focus on an infeasible $15b isolated conveyance plan with really risky outcomes for both the Delta and the environment.

You could also argue that the 2009 Delta Reform Act also requires you to add a column to the PPIC framework for the Delta as a place/economy.  That additional adjustment further strengthens our case.

No Bananas in the Delta? MC Hammer shows DWR experts are wrong

MC Hammer, the rap-pop icon, is among the biggest celebrities of the over half million people that live in the Delta.  He lives on a few acres near Tracy, and he sometimes blogs and tweets about his beloved banana plants.  On the A&E reality show "Hammer Time", you can see his bananas, and he also takes his dad and kids fishing in the Delta.

I mention this because I have been working my way through lots of correspondence on the DPC Economic Sustainability Plan.  The Department of Water Resources wins the detail prize with 58 pages of single spaced comments.

In one surprisingly lengthy section of comments, DWR staff makes a very big deal out of the fact that we have included bananas in our appendix list of the 80 different crops in the Delta recorded in our database in an apparant attempt to discredit us and make us look silly.  They are unaware of bananas in the Delta and say they have been studying the area for years.  So, I had our analyst track down and confirm our less than 1 acre "crop" of bananas, and he tracked it to a location off 205 near Tracy.  It isn't MC Hammer, but apparantly we have some very small scale commercial growing of banana plants, perhaps to serve hobbyists like MC Hammer, or perhaps someone is trying to appeal to the growing number of locavores who crave tropical fruit.  All we know is someone is making pesticide filings for very small amounts of bananas, that it has no bearing on our results at all, and our crop data is more detailed than DWR.

But thanks to DWR picking through all the fine print, I now have learned some new Delta trivia and have the opportunity to be inspired to write this post by MC Hammer's own banana blogging (hat tip to VQ).

I love these trees (plants)...they multiply themselves continously. Each of these groups started off as one plant. The more you cut them back, the taller and stronger they grow....

In life, it is the moments that we are cut back, that we should look forward to new growth in our lives. Bigger, better, stronger and multiplying ourselves by sharing what we have learned with others....

--Hammertime

Update on the Economic Sustainability Plan for the Delta

A 15 page draft executive summary of the Economic Sustainability Plan is now available as part of the August 9 draft.  The previous drafts did not have an executive summary because the draft was too incomplete and preliminary.

The August 9 draft makes some adjustments to the recommendations in the second draft, all of which are included in the executive summary.  The individual chapters can be downloaded here, including chapter 4 on levees and flood risk that is getting the most current attention.  There are four public meetings around the Delta over the next two weeks if you want to hear more and make comments.

There are a few elements of the plan that are still under development for the September/final draft.  The most significant adjustment will be in the Legacy Community chapter which is getting reorganized with new content including better graphical illustration of concepts.  We are also fine tuning some parts of the data analysis in the agriculture chapter and developing a visual concept of what the recreation strategy could mean for a detailed area in the Delta.  None of these will change the broad recommendations in the plan, but will add detail and support. 

Should the Government Sell REOs in bulk?

The Obama administration seems to be coming up with a plan to accelerate that trend by packaging foreclosed properties together and selling them off in bulk to investment groups who will rent them out. 

I don't completely understand the logic behind the plan, and in defense of the administration, it is an RFI (Request for Information) which suggests they are still figuring out the details themselves.  It is supposed to help make rents more affordable, and although it might help speed properties into the rental market a little faster, I don't think it will do anything to help rents in the long run.  I think it is mostly about trying to help the GSEs unload their REO property, and my cynical side fears that it is a plan pushed by big private equity investors to get them access to the nice returns that can be had picking up foreclosure properties around here as rentals.  Will this be good for taxpayers by cutting the losses for Fannie/Freddie/FHA on their foreclosures?  Maybe.  I can't see how bulk sales will bring higher prices for the homes for the GSEs, but it may cut their transaction and holding costs on the properties so they net more in the end.  That's a big if. 

My first impression is that this is a bad idea for hard hit areas like the Valley.  Lots of these homes are going to the rental market anyway, some by local investors and we also have out of towners with local agents buying investment property for them.  Others are selling to local families that are buying affordable foreclosure homes, and that is the silver lining in this whole mess.  Why would we want to reduce that opportunity for locals and pass it on to some hedge fund in New York just because there is a chance that Fannie/Freddie can cut their loss by a whisker.  In the long-run we end up with even more out of town landlords.

I might be a little more supportive of it if the investors who acquired property in this advantageous way were required to include a reasonable and fair, lease-to-own option for the tenants. 

And of course, we shouldn't give up on more effective loan modification plans.  For the few folks I know who have been successful with this, the modification effectively turn the homeowners into renters of their current homes but without the damage and displacement of the foreclosure process on families or neighborhoods.

These are just my initial thoughts and it will be interesting to see the feedback to the RFI and the eventual plan.  I doubt this will be the last post on this topic.

July 2011 California and Metro Forecast

With the weekend, I forgot to post that we released our July 2011 California and Metro Forecast last Friday.  It was interpreted as gloomy, which it is, but it is actually moderately optimistic compared to some of the other forecasts for the Central Valley, particularly Sacramento, and the deepening pessimism about the national economy.  Click here to see the summary.

I remember last fall being amazed that the 10-year U.S. treasury bond was yielding a mere 2.5% during a supposed recovery, and what that said about the general lack of confidence in the recovery.  That didn't last long, and the yield has been a still low 3-3.5% for most of the year.  Today, it closed at 2.4%.  I'm not ready to predict another recession, but it is a safe bet that the October 2011 forecast will be lower.

Economic Sustainability Plan Update

The latest version of the Economic Sustainability Plan was posted last Thursday afternoon, and will be presented to the Delta Protection Commission (DPC) this Thursday in Stockton.  I am the principal, but have had a lot of help.  A few notes:

This is the first complete draft.  It includes actions, strategies, and recommendations in the final chapter which is posted on the DPC website.  All the chapters can be downloaded individually.  The recommendations are only a few pages, but too long to repost here. 

At this point, it is important to remember that the conclusions and recommendations have not been approved by the DPC.  They are consultant recommendations based on our research, interpretation of the evidence, and mandate to develop a plan that enhances and ensures economic sustainability for the Delta while also being consistent with the co-equal goals of the Stewardship Council's Delta Plan.  Since the document currently stands at 244 pages (despite moving a lot of material to appendices that will be posted soon), the last two chapters will ultimately be revised into a summary version of the Economic Sustainability Plan.

ACWA misses "de" quote

Delete the "de" from modest and the result is most. 

A recent ACWA report about the draft Economic Sustainability Plan from the Delta Protection Commission had the following incorrect quote.  "Most agricultural impacts could be offset by recreation economy gains."  The concluding chapter of the draft plan actually states,  "Modest agricultural impacts could be offset by recreation economy gains." 

Those two letters changes the meaning of the sentence quite a bit.  Maybe it is my turn to write a scathing letter to John Laird.

(The last sentence is a joke.  If you knew the pain I have endured this month for a would/could mistake that was quickly corrected, you might find it funny.)

Stockton water-technology start up moves to Milwaukee

From the inbox.  It is rare that an obscure article in the Milwaukee Business Journal touches so many different issues important to my job and this blog.  Check it out while I scream in frustration.

Water technology company plans Milwaukee plant

A California water-technology company is planning to establish a manufacturing facility and offices in Milwaukee that could create up to 300 jobs.

American Micro Detection Systems Inc., Stockton, Calif., is looking for a Milwaukee site for a $7.5-million, 2,000-square-foot manufacturing, testing, assembly and shipping facility, said Robert Keville, chairman, president and CEO...

The company, established in 2003, manufactures equipment that tests water, oil and other fluids for impurities and heavy metals...

Keville said he has not chosen a site. He said he wants the building to be near one of the two places where the University of Wisconsin-Milwaukee is establishing its School of Freshwater Sciences...

Keville said the city of Milwaukee has offered forgivable loans to the project and the state of Wisconsin is offering tax credits...

Keville said Milwaukee is attractive because its local companies can supply the services AMDS needs and because of the efforts to brand that area as a worldwide hub of companies whose products involve water.

“It’s in its infancy,” Keville said, “but it is only going to grow. Lake Michigan isn’t going to get any cleaner by itself.”

Meeusen said AMDS’s planned move to Milwaukee is further proof for skeptics that Milwaukee can become a international seat of water technology companies.

“If we were located on Lake Superior, we would call it Lake Pretty Good,” he said. “We just never believe that we are anything, and I find that very frustrating. The fact of the matter is Milwaukee is a water hub.”

Rental Housing in San Joaquin County

The Business Forecasting Center recently published a brief report on the rental housing market in San Joaquin County.  Despite the collapse in home prices that has made purchasing homes very affordable, we found rental housing in the area is still quite expensive and hard to find.

I am pleased that the report has sparked a local discussion of an important issue that isn't getting enough attention in this crazy housing market.  See these articles from the Stockton Record Sunday and today.

Reed Fuji:  High Rents Tied to Building Choices

Michael Fitzgerald: More Could, Should be Done to Revive S.J. Rental Sector.

The 4th of July and Delta Levees

[Youtube video of Delta fireworks removed for faster blog loading.]

Should Delta levees be upgraded and then repaired if they fail? Should significant areas of open-water caused by permanently flooded islands be part of the Delta’s future? It is a reasonable question and as one who believes in the value of cost/benefit analysis, I like the set-up of the levee decision analysis paper from Suddeth, Mount and Lund of UC-Davis. Unfortunately, their conclusion that the majority of Delta levees aren’t worth the investment or recovery is way too strong given the relatively low assumed values of land, infrastructure and the variety of things that they have not measured, including recreation impacts. Luckily, the editor of the SF Estuary journal appears to have forced them to include more sensitivity analysis results before publishing their paper, a result I consider better than outright rejection in this case since we can see more scenario results from a paper that was already influential.

This picture from their paper emerged from a scenario with better land and infrastructure values, and is enough to move the conversation forward.  The key result is the 6 central Delta islands that would be converted to open water over time.

Jeff Mount, a member of the Stewardship Council’s independent science board, apparently agrees, since he put the same map forward in a letter to the Stewardship Council. In my view, their earlier analysis did establish something useful: the discussion of do not resuscitate lists can be narrowed down to these six islands, plus maybe 2 or 3 very small islands scattered around the Delta like Deadhorse or Fay. (Note: If they considered the new Stockton Water Supply project, Empire Tract (#16) would be removed and it would be a five island open water area.)

In the Economic Sustainability Plan, I directed our team to take a serious look at this future open water configuration.  Given the absence of key infrastructure in this area, few residents, and low-value agriculture, these islands certainly rank the highest on the candidate list of places we might allow to be converted to open water.  On the downside, there are concerns about the impacts on levees on surrounding islands, water quality concerns related to increasing organic material for municipal and industrial water intakes. 

I thought recreation would be the wild card, and have been a little surprised at the almost universally negative response from recreationists, owners of recreation related businesses in the Delta, and recreation experts who have been studying the area for years. 

One of the first things I heard was, “It will ruin the 4th of July.” I am usually out of town on the 4th, and didn't know Barron Hilton has been hosting a large fireworks show off Mandeville Tip since 1958 near his duck club on Venice Island.  This location is directly in the middle of this open water scenario.  It is the biggest weekend of the year for Delta recreation.

The next thing I learned is that this area is the most popular area for boating, and that about half of Delta marinas surround the immediate area and in most cases would be potentially negatively impacted by the loss of wind/wave protection and the necessary levee improvements on adjacent islands. I didn’t go to all the recreation focus groups, but my understanding is that it got a very negative reaction from boaters and marina owners who anticipated high waves and winds would drive them elsewhere, possibly out of the Delta all together. Since this is the most popular area for boating and boating is by far the most important recreational activity to the Delta economy, it seems this plan could have harmful negative economic effects that aren’t considered in the Suddeth et. al. models. Few people seemed to think that sailing or other recreational opportunities would fill the void.

The last thing I learned is that it could be bad for hunting. I spoke with one farmer who grew low-value crops in this area, and I asked why he didn’t grow different crops. He explained that corn prices have in fact made growing corn high value, but the real answer was that in the Delta there are farmers, farmers who also hunt, and avid hunters who do some farming when it isn’t duck season.  He considered himself in the latter category, and insisted he would grow corn if it were 10 cents a bushel, always has, because it leads to good duck hunting and that is the top priority.  It seems there is more underlying the value of land than just the value of crops.

So, how much is all that worth? I don’t know for sure, but it is a potentially big deal, especially if it really is as negative for boating as our initial feedback suggests. We have learned that levees that protect low value agriculture may be supporting high-value recreation.

Personally, I would like there to be less talk about Delta recreation/tourism as a driver of income and jobs, and more talk about it just being unique and fun. That’s worth something, but it isn’t anywhere in the computer models about Delta levee decisions. Perhaps it should be.

Have a safe and happy 4th everyone!

[Youtube video of crazy Delta jet skier removed for faster blog loading.]

Impacts of Isolated Conveyance on Delta Agriculture: Update

I have been too busy to follow much of anything for a few days, but a concern has been raised to me that the $200 million agriculture loss from isolated conveyance reported in the post below and a newspaper article is an exagerration because it reflects a heavy pumping scenario, not what is actually proposed in the current BDCP.  This is a good point, and I agree that a "would" should have been a "could" or presented as a range and I take responsibility for that slip.  It will be corrected in presentations later this week, similar to what is written below. 

If forced to use a single number, I am using an estimated impact of agricultural revenue losses of $50 million.  How is it supported?  The models that have been developed for the report estimate annual losses ranging from $27m under current south Delta salinity standards (0.7 EC) to $64m under proposed  (1.0 EC) salinity standards currently under consideration by the SWRCB (I note that these numbers are revised modeling results with lower numbers than I was provided to include in the 1st draft).  In addition, the footprint of the tunnel conveyance is 8,000 acres which will be primarily farmland in a zone that currently averages $2,075 per acre.  Assuming some of it takes out non-farmland, a reasonable estimate is another $8m to $16m from the footprint.  That gives you a reasonable estimate of revenue losses of isolated conveyance to Delta agriculture (assuming it is operated as proposed in the draft BDCP) of $35m to $80m.  Thus, I am comfortable using $50m as a discussion number, and have rewritten the summary of this results as:

"If operated as proposed in the draft BDCP, isolated conveyance would decrease Delta agricultural production by about $50 million, and would have a negative impact on tourism development and the rural quality of life.  If a large isolated conveyance were operated to maximize water supplies, south Delta salinity could triple and agricultural production losses could increase to $200 million.  The higher scenario illustrates the risk of a large capacity conveyance to the Delta since there will be financial and political pressure to increase exports to high levels."

I also emphasize that it is a draft, results continue to be refined, but that the impacts are in fact very consistent with those Prof. Howitt estimated in 2007; $70m loss, up to $200m in high scenarios. Not much difference in this number, but the adjectives we use and our overall view of the situation is very different.

I don't intend to post every little update and revision to this report as it progresses through drafts, but felt this clarification was needed now given a concern that has been raised.

Update:  There was a typo in the original post, the upper level of salinity loss is $64m but was originally reported as $54m. 

First Administrative Draft of the Economic Sustainability Plan for the Delta

[Update Note: This is a description of preliminary results from a first, incomplete draft.  For up to date information on the most recent complete drafts of the plan, visit the Delta Protection Commission website.  I also deleted a paragraph that listed key contributors, because several of the sub-contractors have been bothered by people associated with the BDCP for their names appearing on this blog that makes critical comments about the BDCP.  In hindsight, I shouldn't have deleted the paragraph, but I can't recover it now.]

As some ValleyEcon readers know, I am the PI on the Delta Protection Commission's Economic Sustainability Plan (phase 2).  The first administrative draft of the ESP report was posted this afternoon in preparation for a DPC workshop at the Port of Stockton on June 23.  This contract was only awarded in March, and a stellar research team has been working hard to get us to this point in under 3 months.  It is work in progress, and some portions are incomplete.

...
The initial list of key findings is below:

·         Delta agriculture supports 13,700 jobs, $1.1 billion in value-added, and nearly $2.8 billion in economic output in the five Delta counties.  In addition, Delta agriculture supports nearly 23,000 jobs, over $1.9 billion in value-added, and over $4.6 billion in economic output in the state of California. (chapter 7)

·         Delta recreation and tourism supports 2,700 jobs, $152 million in value-added, and nearly $284 million in economic output in the five Delta counties.  In addition, Delta recreation and tourism generates over 4,900 jobs, $324 million in value-added, and $600 million in economic output in the state of California.  (chapter 8) 

·         Delta agriculture supports 5 times more jobs, and 7 times more value-added (income) than Delta recreation and tourism.  While recreation is an important supporting economic sector and adds to the Delta’s unique quality of life, it is unrealistic to expect that recreation and tourism could replace agriculture as the Delta’s economic driver.  (chapters 7 and 8)

·         All available indicators for Delta recreation suggest Delta tourism has been flat for one to two decades before the onset of the recession.  Regional population growth is an opportunity, but does not by itself guarantee growth in Delta recreation and tourism.  Delta boating and fishing increased rapidly in the 1980s and previous decades, but has slowed since.  Improved water quality and new investment in recreation facilities and hospitality enterprises are frequently cited as being essential to growing recreation and tourism in the Delta. (chapter 8)

·         Improving the visibility and recognition of the Delta as a place will benefit Delta tourism and agriculture.  The Delta Protection Commission should complete its feasibility assessment of National Heritage Area designation. (chapter 8)

·         Delta levees are critical to economic sustainability.  The Delta levee system protects critical water, energy, and transportation infrastructure for the state and regional economy, and supports all aspects of the Delta economy.   (chapter 4)

·         Delta levees are in better condition than often portrayed, but still need investment.  As opposed to frequent reports that cite over a thousand miles of “fragile” levees in need of billions in repairs, there are actually about 370 miles of Delta levees that need roughly $500 million in investment to reach appropriate standards.  This goal could be reached with strategic use of existing bond funds. (chapter 4)

  

·         Population trends in the primary zone are relatively flat, but uneven across regions.  North Delta population increased over the past decade, whereas South and East areas of the primary zone declined in population.  In contrast, the secondary zone population increased 25% between 2000 and 2010.  (chapter 2)

·         The current capacity of Delta tourism infrastructure and enterprises is insufficient to capture significant income from increased visitation.  If the goal of the Delta Plan is to increase Delta tourism, there needs to be greater incentives for investment in tourism businesses, not increased regulation of “covered actions” in the Delta that discourage these investments. (chapter 8)

·         Implementing the November/December 2010 draft of the Bay Delta Conservation Plan would be devastating to the Delta economy.  It would cause a 30-50% decline in Delta agriculture, and could decrease Delta recreation and tourism.  (chapters 7 and 8)

·         Large, isolated conveyance would decrease Delta agricultural production by nearly $200 million, and negatively impact Delta tourism.  Increased South Delta salinity would cause large decreases in the production of high-value truck crops, and also negatively impact high-value vineyards.  Increased salinity would also negatively impact boating, and the large scale industrialization of the Sacramento River with five large new pumping plants and intakes near historic Legacy Communities would have negative impacts on tourism development and the rural quality of life.  (chapters 7 and 8)

·         The BDCP proposal to create 65,000 acres of tidal marsh habitat would reduce annual agricultural production by a minimum of $84 million, and generate little if any compensating tourist spending.  The $84 million annual loss in agricultural production assumes targeted land acquisition to minimize impacts, and annual losses could exceed $100 million if agricultural encroachment is not minimized.  (chapter 7)

·         Several influential studies of Delta issues have significant errors in economic analysis.  The most notable problems are various PPIC reports that have misled decision makers about the Delta economy and inaccurately portray the economics of the peripheral canal and investment decisions in Delta levees.  (chapter 5)

DRMS Phase 2 report released

Interestingly, I just discovered the Department of Water Resources released the Delta Risk Management Strategy (DRMS) Phase 2 report on Monday when searching for a tidbit of information from DRMS Phase 1.

June 13, 2011 - The Department of Water Resources has released the Delta Risk Management Strategy Phase 2 Report and Executive Summary. The Delta Risk Management Strategy (DRMS) Phase 2 report builds on the knowledge gained from the DRMS Phase 1 assessment to evaluate scenarios which could reduce the risks to our State economy. The methods include a selection of improvement strategies considered at the time of the study in 2009; however, today, there are more options in play. The information in the report provides insight to methods that may be used by the Department and others to manage risk.

Among the obvious signs that the study is from 2009 are that it uses a $4.9 billion cost estimate for a peripheral canal that is dated from 2007.  The results, and I have not reviewed to see how reliable the calculations are, show that improved levee strategies and isolated conveyance rank very close, and anyone who would interpret the results as saying isolated conveyance is best should realize that any net benefit advantage from isolated conveyance completely disapears if one uses more current cost estimates.

There are many other curious aspects of the report, such as its combining conveyance scenarios with putting highways on piers and armored infrastructure corridors that confuse the issues.  At this point, the phase 2 report will probably have little impact on the debate.  However, it is hard to use the DRMS Phase 2 results to justify a peripheral canal over upgrading levees in the way that many spun Phase 1.

The timing and low profile of this release is probably the most interesting aspect of it.  Very odd.  I would be interested in hearing more about that if anyone knows and is willing to share.

Water and Jobs in the San Joaquin Valley, again...

Since Devin Nunes introduced H.R. 1837, I don't think a day has gone by when someone hasn't asked me to write a letter, op-ed, blog, press release, t.v. show, speak at a meeting/hearing, etc.  I've even had people try to make it easy for me by sending ghost-written letters and op-eds for me to approve complete with folksy quotes and flattering self-references (sorry, but I write my own stuff). 

I did have an intern call his office a few times to get a source on the 25,000 to 30,000 jobs created claim in the bills press release and promotional materials, but we never got a call back.  I think I saw the fisherman respond by pulling their own billion dollar propaganda back out, and it makes me feel as if the debate has taken a few steps backwards to a place I thought we left behind.

I typed up a FAQ style handout for a meeting earlier today, and posted it to our website here.  Not much new information, but hopefully this format is useful to the folks asking for something new.

So, what do I think of the bill anyway?  I have been interested in all the comments about how Nunes is undermining the BDCP, suggesting that his bill is bad for his own constituents.  Yes, he is undermining BDCP, but BDCP isn't shaping up to be a great deal for South Valley agriculture anyway.  The costs are much higher and the additional water is much lower than they thought it would be when the originally signed on to look at it.  I think South Valley ag. is better off under the current biops (less water than they want, but at least most of it is cheap) than under an unsubsidized BDCP (a little more water, but all the water is a lot more expensive).  If that's the case, then the best strategy for them is to try to change the pump operations through legal and political channels.

Unemployment Friday: CA down to 11.9%, but other states dropping faster

In today's report, some people are trying to make something positive of dropping below the 12% unemployment threshold to 11.9%.  They shouldn't get too excited.

What would be exciting is if we were seeing the kind of declines seen in places like Michigan and Nevada.  Unemployment used to be higher in Michigan than in California, but it is down to 10.2% there from a peak in the 14s, and Nevada is down to 12.5%, dropping 0.7% in a single month and it also peaked in the 14s.  If these trends continue, Nevada may drop below California and leave California with the highest unemployment rate in the U.S.  And then we will see a new wave of stories on California's downfall.

However, unemployment rate movement is being driven more by labor force changes than employment growth.  Michigan and the auto industry is rebounding, but it's labor force is also shrinking, down 6% over 4 years.  So, it is recovering a little better than California, but not as much as the unemployment rate would lead you to believe.

And Nevada.  The labor force there has declined by 4% over the past year, and that is what has driven the unemployment rate from 14.9% to 12.5% in a year, although tourism and the casino's are slowly picking up, employment is still down.

So when California's unemployment rate becomes tops in the nation later this year, it is an indicator that our economy stinks and recovery is lackluster.  But it also means that people aren't giving up on California's job market (whether by moving or leaving the workforce) at the same pace as Nevada or Michigan.

Within California, some of the big inland areas like Sacramento and Riverside are showing large labor force declines too, but only about half that seen in Nevada.  This month's job report mostly reflects the same patterns.  Silicon Valley, Disneyland and Hollywood are recovering.  The housing market continues to keep inland areas down; although there continues to be signs in the Valley of solid growth in agriculture, transportation/logistics, and food manufacturing; just not enough to overcome the housing and local government crash.