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California employment back to pre-pandemic level

But some see economic storm clouds on the horizon, including a possible $25 billion budget deficit and a recession.

(CN) — California added more than 56,000 jobs in October — one in five of all new jobs added nationwide — enough to bring total employment in the state back to pre-pandemic levels.

“California has now fully recovered all jobs that were lost to the pandemic-induced recession,” said Governor Gavin Newsom, in a statement. “But we know this isn’t the finish line. We are making historic investments to combat rising costs in the state and bring money directly into your pockets to help with everyday costs."

Californians are currently receiving tax refunds — checks in the mail meant to ameliorate the high cost of gas prices — of between $200 to $700 for individuals and $400 to $1,050 for couples who file taxes jointly.

September's unemployment rate fell to 3.8% — a record low, according to the governor's office. That rate rose slightly in October to 4%.

Though those numbers suggest a robust economy, there are signs of trouble ahead. A number of big tech companies, including Meta, Amazon and Twitter have recently laid off thousands of employees. And some analysts fear a coming recession brought on in part by the Federal Reserve's response to curb inflation.

"The reality is that it’s a pumped-up economy," said Stuart Waldman, president of the Valley Industry & Commerce Association, a pro-business group based in the San Fernando Valley. He noted a lot of businesses have survived by relying on federal loans and grants. "A lot of businesses have been pumped up by the infusion of federal money. But we’ve got a recession coming. I think we’re teetering."

Among the warning signs: a report by the state's nonpartisan Legislative Analyst's Office projecting a $25 billion budget deficit during the next fiscal year, thanks to declining tax revenues. The office cited the chances of a nationwide recession as one reason for its gloomy forecast.

"The longer inflation persists and the higher the Federal Reserve increases interest rates in response, the greater the risk to the economy," the report reads. "The chances that the Federal Reserve can tame inflation without inducing a recession are narrow. Reflecting the threat of a recession, our revenue estimates represent the weakest performance the state has experienced since the Great Recession."

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