Typically unemployment does not turn around until six or seven months after a recession, Nakamoto said.
“If that’s the case, we’re probably going to see this continuing trend of moderately rising unemployment levels into maybe about the first or second quarter of 2010,” he said.
Unemployment across Los Angeles County increased from 12.2% to 12.7%, according to seasonally adjusted state data, while California’s unemployment rate decreased slightly to 12.2%, well above the national average of 9.8%.
Employers who have laid off employees are finding ways to do more with less, which means it could be a long time until businesses see reason to begin hiring again, said Greg Lippe, chairman of the Valley Industry and Commerce Assn.
“I think we have a bigger economic problem here as a result of people not working,” Lippe said. “So what you have is the state having to pay for people not working. You have a spiral that appears to be never ending, going into the negative direction.”
A shrinking labor force means fewer people with discretionary income, which hurts the large retail hubs in Glendale and Burbank.
“There are heavy retail operations that have to be negatively impacted by people not working and not shopping,” he said.
Lippe attributed some of the problem to California laws and regulations he said made it more inhospitable to businesses than other states.
“It causes businesses to not be flexible in the way they operate,” he said.
As companies have slashed payrolls and lowered costs, there’s less incentive to begin hiring, Lippe said.
“They’ve figured out how to operate with fewer people,” he said.