The unemployment in California is causing more and more foreclosures

The unemployment rate in California is alarming – hurting the finances of the individual and the state. It has reached a record since the last seven decades making a mockery of all talks of economic recovery of the nation. Millions of Americans are without work. The unemployment graph has reached its highest point since 1940.

In California the unemployment rate is 12.2% as per the findings of Bureau of Labor Statistics. It is way higher than the average of the nation that reads 9.7%. California is the most populous state in the country. In unemployment percentage it ranks fourth coming close behind Michigan, Nevada and Rhode Island. In 1940 the rate of unemployment in California was 14.7% said Kevin Callori of California Employment Development Department.

California has been battered by the same blows that have hit the rest of the country since the previous two years. But it has been especially vulnerable not only to the foreclosure mayhem but also to the slowing down of the construction sector. The latter industry has been responsible for the phenomenal growth of California over the past then years.

The building levels of California have dropped from $63 billion in 2005 to $23 billion in 2009. Building of residential houses has been less than a quarter of the figures of 2005 as per the findings of Center for Continuing Study of the California Economy.

Approximately 500,000 jobs that were lost in the state came from finance, construction, real estate and other industries connected with construction. Stephen Levy of the center said, “We were at the epicenter of the housing bubble, and we are at the epicenter of the fallout. The reason we are doing worse in California than other states is construction.”

Recently there have been some signs of recovery in California but unemployment has remained high. Employment is taken as the last indicator to point to economic recovery or not. Recession continues to be persistent and is expected to continue for some time. A current study by University of California, Los Angeles, has forecast that although the state will register growth of 2% per quarter the unemployment figure would continue to stay over 10%.

The pain felt everywhere in California is acute. The state relied heavily on income of individual income tax to meet its budget requirements. The fall of the stock market largely erased the personal wealth of California. Loss of jobs related to the housing bust joined hands to dramatically reduce the revenue kitty of the state.

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