California economy out of intensive care, but it's still one sick puppy

This morning's employment numbers (see earlier post) are the continuation of a trend we've seen for much of the year: Stubbornly slow job growth, but job growth just the same. Nearly 200,000 positions have been added to the state rolls this year (86,000 in the last three months), and the October unemployment rate is down 0.8 percent from where it was a year earlier. There's no sleight-of-hand in these numbers - you're seeing improvements in an array of industries, many of them tied to technology, manufacturing, and exports. Tourism is doing well, too. Bearish commentators who consider California a hopeless basket-case might pooh-pooh the decent news - and let's face it, a state unemployment rate of 11.7 percent (12.2 percent in L.A. County) remains extremely high. What's more, it's likely to stay in double digits through at least next year. But any recovery has to start with the basics - in this case, the willingness of businesses to hire people. And that seems to be happening, at least to some degree.

So the patient is out of intensive care. Getting him out of the hospital is something else. Certainly, there's no shortage of serious ailments: Housing (sales are sluggish, prices keep falling, and piles of defaults still await final resolution; schools (deep budget cuts at all levels raise questions about the ability of students to handle the kind of work that will be required in the next 10-20 years); state budget (more cuts are likely this year, and next year's deficit is in the $13 billion range); dysfunction (legislature still being blocked from necessary tax hikes by a minority of recalcitrant Republicans); and pension shortfalls (massive amounts are owed and not nearly enough money is coming in). Plus, of course, there are the macro worries that state and local officials have little control over - stuff like the European debt crisis, the ongoing nonsense in Washington, and consumer reluctance to spend money. You get the idea - this is not a wonderful picture. And yet it's not a hopeless one either.