If the Golden State were a country, it would have the fourth-largest economy in the world, rivaling that of Japan and Germany. Despite its $4 trillion gross state product, however, California is struggling. Gov. Gavin Newsom (D), the all-but-declared 2028 presidential candidate, has presided over growing red ink, increasing homelessness, a fleeing population, and rising unemployment. Indeed, the state’s labor market has flatlined and is worse than initially reported, leaving many to ponder if Gavinomics is what the United States needs in four years.
California Dreams of Job Growth
Bureau of Labor Statistics data indicated that California added 250,000 new jobs between September 2023 and September 2024. However, over the last few years, downward revisions were ubiquitous in updated federal employment statistics, and Newsom Nation has not been immune to the lower adjustments.
According to the state-funded Legislative Analyst’s Office (LAO), California created 76% fewer positions, producing only 60,000 jobs in those 12 months. Put simply, employment increased at a tepid pace of 0.3%. Moreover, California's employment gains came primarily from the government and public sector-adjacent hiring.
That is not all. The LAO determined that the state's private sector erased 154,000 jobs from September 2022 to April 2024. At the same time, the public sector and government-supported sectors added approximately 361,000 new jobs. As Liberty Nation News has reported over the last few years, this is unsurprising since government and government-related industries have witnessed immense employment gains.
The Revisions Are Coming!
In December, the Federal Reserve Bank of Philadelphia published its Early Benchmark Revisions of State Payroll Employment data for the second quarter of 2024. The regional central bank discovered that jobs were lower than the Bureau of Labor Statistics first reported. Early estimates show lower employment numbers in 25 states, higher changes in two, and small adjustments in the rest. While the federal government registered a 1.1% employment gain, the Philadelphia Fed concluded that payroll gains were down 0.1%.
Meanwhile, the Bureau of Labor Statistics publishes its annual benchmark revisions for the prior year every February. Like 2023, last year saw sizable downward alterations. The adjustments removed 610,000 jobs from 2024. The typical benchmark revision is +0.1%, but last year's changes were -0.4%.
This is not the first time such a seismic number alteration has occurred.
In August, the Bureau of Labor Statistics' preliminary annual benchmark revisions to the non-farm payroll numbers from April 2023 to March 2024 revealed that employment growth was exaggerated by 818,000. This represented the second largest on record and the biggest since the Great Recession. The report was comical because all the changes were observed in the private sector while the government added 1,000 positions.
When the next set of changes happens – and, yes, additional negative modifications to the data are coming – the press will assign blame to President Donald Trump and his administration.
Now, those on the outside looking in will wonder why this has become a frequent occurrence. The theories vary. Officially, the statisticians will say that corrections happen because the initial estimates are incomplete; some businesses are slow to submit their payroll information, and response rates to the establishment and household surveys of the monthly jobs report have fallen dramatically. Armchair economists on the social media platform X will assert that the fine folks at the Bureau of Labor Statistics are master Excel coders and might insert a few cells, delete a couple of columns, and adjust the codes based on who is sitting in the White House or what the calendar shows.
The Next Few Years
Will the monthly non-farm payrolls report continue to reflect downward corrections over the next few years? Everyone will be picking up their magnifying glasses to find out.
Are expectations for the broader labor market up in the air amid uncertainty surrounding President Trump’s trade policy? While businesses, economists, and media pundits declare the future is uncertain, projections for the US jobs arena appear intact – for now. The Fed's updated Summary of Economic Projections suggests a steady labor market, with the unemployment rate slightly above 4%. The Philadelphia Fed's First Quarter 2025 Survey of Professional Forecasters report indicates monthly employment gains of 145,000.
California’s economic conditions are rapidly deteriorating. During the 2028 election campaign, when Newsom stands on the debate stage with his fellow Democrats, all his opponents have an easy response to his remarks: “Don’t California my America!”
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