By Dan Walters The Sacramento Bee
Published: Sunday, May. 23, 2010 – 12:00 am | Page 3A

Has California’s recession-wracked economy finally touched bottom and begun to recover?

The consensus among government and private economists who chart the world’s eighth-largest economy appears to be a qualified “yes” – qualified because even if recovery has begun, they also believe it will be slow, especially in employment.

Even if the nation’s recovery is brisk, California is likely to lag because the housing meltdown hit the state particularly hard. As it did, it adversely affected other major sectors of the economy, such as retail trade.

Recovery must not only recapture the 1.4 million jobs lost since 2007 but absorb growth in the labor force. The state added 14,200 jobs in April, for example, but the unemployment rate remained stuck at 12.6 percent because the labor force also increased. The number of Californians holding jobs in April – 16 million – is virtually identical to the number employed in April 2000, when 4.6 million fewer people lived in the state.

California needs roughly 200,000 new jobs a year just to tread water as its population grows. The much-ballyhooed conversion of Fremont’s just-closed NUMMI auto assembly plant to build electric cars is expected to add 1,000 jobs. That’s just two days of mediocre job growth for the state.

“A return to positive job growth is a good sign,” says Gov. Arnold Schwarzenegger’s revised 2010-11 budget, “but as with the nation, it will take considerable time to recoup these losses.”

The Legislature’s budget analyst, Mac Taylor, agrees with the slow recovery forecast. Even so, he says, the state faces years of stubborn deficits.

In round numbers, the baseline general fund budget – the promises lodged in law by legislators or voters – is $100-plus billion a year. The state’s ongoing revenue is about $25 billion less.

Revenue is expected to hit $91 billion in 2010-11, but that includes some one-time transfers from special funds and other funny-money sources, as well as proceeds of temporary tax increases.

The temporary taxes will start to expire soon, other pots of money that can be raided are shrinking, and the state faces annual deficits in the $20 billion range for years to come.

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