Coronavirus: Newsom labels California's economic crisis a 'pandemic-induced recession' announces economic recovery advisory group
Gov. Gavin Newsom on Friday labelled the state's economic crisis a "pandemic-induced recession."
SACRAMENTO, Calif. (KABC) -- Amid an announcement Friday of 3.1 million people filing for unemployment in California in the past month, Gov. Gavin Newsom labeled the state's economic crisis a "pandemic-induced recession."
California's job loss since March 12 signaled a sudden end to a record 10-year streak of job growth because of the coronavirus outbreak that has shuttered nonessential businesses.
"We are now in a pandemic-induced recession here in the state of California," Newsom said during his daily press conference. "We have to begin to work through each and every sector of our economy to put together tangible actionable ideas for short-term, medium- and long-term economic recovery."
The unemployment rate in the nation's most populous state is now at 5.3% -- the largest rate increase on record since 1976, when state officials began using the current formula for tracking job losses.
That number "masks the reality of the where the real unemployment is today," Newsom said, as it does not reflect factors such as under-employed or gig economy workers.
To help California recover from the recession, Newsom also announced the creation of the Governor's Task Force on Business and Jobs Recovery, which includes four former California governors: Pete Wilson, Arnold Schwarzenegger, Gray Davis and Newsom's predecessor Jerry Brown.
"We are the most diverse and the largest state in the union," Newsom said. "We recognize our unique responsibility as Californians to do our fair share and lead the way in terms of job creation."
Billionaire philanthropist Tom Steyer will co-chair the economic recovery task force. The advisory panel includes over 80 members, including Disney Executive Chairman and Chairman of the Board Bob Iger, Apple CEO Tim Cook and former Chair of the Federal Reserve Janet Yellen.
"We will try to come up with a recovery plan that is worthy of California's past and pushes us to a better future, and remedies some of the injustice which this COVID-19 pandemic has revealed in our society," Steyer said.
The governor also provided an update on coronavirus cases in the state. He said 95 additional people have died as a result of COVID-19 in the past 24 hours, the highest single-day death toll in California thus far. So far, the state has confirmed 985 coronavirus-related deaths. There are more than 26,000 confirmed COVID-19 cases statewide.
Hospitalizations went up by 1.2% while ICU hospitalizations dropped by a modest 1.4%.
"We have bent the curve, it has begun to flatten. But again it has not moved in the direction that we are ultimately ready to celebrate."
Earlier this week, Newsom outlined a detailed plan for reopening the economy.
The governor described a six-pronged framework of parameters and tools that are needed before the state can implement major changes to the state's stay-at-home orders and other COVID-19 interventions, including a widespread expansion of coronavirus testing and "vigilant" protection against infection of California's most vulnerable residents.
Newsom signed an executive order Thursday to grant two weeks of supplemental paid sick leave to California food workers who have been infected with COVID-19, exposed to the virus, or are otherwise ordered to quarantine and isolate.
The unemployment numbers are just a glimpse of the pain people are already suffering. The job losses were based on a survey taken the week that included March 12. That was one day after the NBA suspended its season and Gov. Gavin Newsom banned gatherings of more than 250 people, prompting the closure of Disneyland and other California icons.
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Most of the state's job losses occurred after that date, accelerating once Newsom ordered bars and restaurants to close their dining halls and told everyone to stay at home except for buying groceries or other essential tasks.
Michael Bernick, an employment attorney at the law firm Duane Morris and a former director of the state Employment Development Department, said it's very likely California's unemployment rate during the "Great Lockdown" will be well over 12.5% - which is the highest it ever got during the Great Recession last decade.
"These numbers indicate only a small part of the devastation," Bernick said.
California posted job losses in six of the state's 11 industry sectors. More than 67% of the losses came in the leisure and hospitality industry, which includes restaurants. Other services, which include things like mechanics and salons, lost 15,500 jobs while construction - which state officials had deemed an essential service exempt from the stay-at-home orders -- lost 11,600.
Friday's jobs report from the state Employment Development Department mark the end of an historic run of job growth in the Golden State. Since 2010, California added more than 3.4 million jobs, accounting for 15% of the nation's job growth as it emerged from the Great Recession.
But with remarkable speed, California is now leading in the opposite direction. Its more than 3.1 million unemployment claims since mid-March account for over 14% of the nation's total, said Sung Won Sohn, a business economist at Loyola Marymount University.
"Unemployment is in a free fall, and no bottom is yet in sight," he said.
However, Sohn said there is hope California could be in a better position to weather this downturn because of the state's dominance in the technology industry, which has seen record demand for streaming services and remote work applications.
But others aren't so optimistic. The speed of job losses is unlike anything the California - the world's fifth largest economy - has ever seen. The government will likely lift stay-at-home restrictions gradually, meaning spooked consumers and employers will be slow to re-engage.
"That's what worries me," Bernick said. "We're going to have to be very innovative on how we get out of this.
The Associated Press contributed to this report.
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