California's unemployment rate rose to 10.1 percent

UPDATE 3-California's unemployment rate above 10 percent
Fri Feb 27, 2009 10:01pm GMT

By Jim Christie

SAN FRANCISCO, Feb 27 (Reuters) - California's unemployment rate rose to 10.1 percent in January, its highest level in a quarter century, as recession tightened its grip on the most populous U.S. state.

Weakness in the housing and consumer sectors helped drive the jobless rate up from a revised 8.7 percent in December and 6.1 percent in January 2008 and to above the national average in January of 7.6 percent, state officials said on Friday.

Economist Jon Haveman of the consulting firm Beacon Economics said he expects California's jobless rate will climb to the mid-10 percent range and settle there for much of this year.

"It's headed north," Haveman said, noting his outlook reflects Friday's report that the U.S. economy in the fourth quarter shrank at a 6.2 percent annual rate, the deepest contraction since early 1982.

"Things are just simply worse out there than anticipated," Haveman said.

Governor Arnold Schwarzenegger said the state's unemployment report was a "sobering reminder that there is nothing more important than getting California's economy back on track."

California officials hope to bolster the state economy with federal stimulus dollars for public works and are rushing to pump state money into infrastructure projects as well. Continued...