Sky-high prices mute California’s economic recovery

Your guide to California policy and politics
Emily Hoeven BY Emily Hoeven May 23, 2022
Presented by New California Coalition and California Water Service

Sky-high prices mute California’s economic recovery

In summary

California’s unemployment rate is improving, but inflation, sky-high prices and high interest rates threaten the state’s economic recovery.

Starting today, face masks are once again required for students and staff at Berkeley Unified School District. Los Angeles County on Friday extended its mask mandate for public transit and transportation hubs. State health officials are urging eligible 5- to 11-year-olds to get their COVID-19 booster shot.

The trio of actions comes amid a steady uptick in California’s COVID test positivity rate — which breached 6% on Thursday, just a few days after hitting 5% for the first time since February — and signals further uncertainty for an economy already buffeted by troubling financial winds, including skyrocketing inflation rates.

  • Berkeley Unified Superintendent Brent Stephens: “We are experiencing an increase in educator absences at this time. Most recently, we have only been able to fill about 50% of our teacher absences with substitute teachers.”
  • Andrew Shore, owner of Sea Pointe Design + Remodel, an Irvine-based residential remodeling firm, told the Wall Street Journal: “We have had a number of (projects) who have been in the pipeline for months and are balking. … I really want to see how the next three or four months go before we hire anyone else and be overstaffed rather than understaffed.”

Against this muddled backdrop, California’s unemployment department on Friday released a report showing the state’s jobless rate fell to 4.6% in April, its lowest during the pandemic and a slight drop from March’s revised rate of 4.8%.

  • Gov. Gavin Newsom: “California continues to lead the nation’s economic recovery, getting more people back to work and off the unemployment rolls than the rest of the country. But we know more work is needed to bolster the economy and help offset higher costs that families are dealing with right now.”
  • Still, California’s job gains are slowing relative to other states: The Golden State added 41,400 nonfarm jobs in April, behind Florida’s 58,600 and Texas’ 62,800, according to the California Center for Jobs and the Economy.
  • And new federal data shows that California accounts for more than 25% of the nation’s ongoing unemployment claims — even though it had nearly 1.28 million unfilled job openings as of March 31, said Michael Bernick, an attorney at Duane Morris and former director of the state Employment Development Department.
  • Bernick: “The picture that emerges … is of a state economy that is continuing to recover, but in danger of stalling or going backward in light of the latest news on inflation and interest rate hikes.”

Case in point: California gas prices hit a new record per-gallon high of $6.07 on Sunday, just a few days after passing $6 for the first time in history.

And the median price of a single-family home reached a record $884,890 in April, according to the California Association of Realtors — even as sales dropped 8.5% on an annualized basis.

  • Jordan Levine, vice president and chief economist for the Realtors: “With April pending home sales recording the worst drop in two years, the affordability challenges that buyers have been encountering are materializing in recent sales trends, and further declines in housing demand could continue in the second half of the year.”

The coronavirus bottom line: As of Thursday, California had 8,797,890 confirmed cases (+0.5% from previous day) and 90,382 deaths (+0.2% from previous day), according to state data now updated just twice a week on Tuesdays and Fridays. CalMatters is also tracking coronavirus hospitalizations by county.

California has administered 75,709,724 vaccine doses, and 75.2% of eligible Californians are fully vaccinated.


1 Housing, housing, housing

California Governor Gavin Newsom tours Bella Vista Inn, which is being converted to interim housing for the homeless, on Thursday, Jan. 13, 2022, in Santa Clara. Photo by Noah Berger, AP Photo
Gov. Gavin Newsom tours Bella Vista Inn, which is being converted to interim homeless housing, on Jan. 13, 2022, in Santa Clara. Photo by Noah Berger, AP Photo

Speaking of housing, Newsom did not mince words in a Thursday interview with the San Francisco Chronicle editorial board: “NIMBYism is destroying the state,” he said, referring to communities with a “not in my backyard” mentality that block the construction of affordable housing, duplexes and homeless shelters in their neighborhoods. “It’s critical to hold cities and counties accountable,” Newsom added. “There’s a crisis. Why the hell are you stopping projects? I mean, we’ve seen it over and over.” (Newsom, in the same interview, said he has “sub-zero interest” in running for president and that he is “hopeful” Vice President Kamala Harris will be “the next president of the United States.”)

The person charged with enforcing state housing laws is Attorney General Rob Bonta, who’s effectively become California’s top housing cop. But, if a swath of recent articles are any indication, he’s got his work cut out for him:

2 Drought hammers Sacramento Valley

Mathew Garcia stands in one of his fallowed rice fields near his home in Glenn on April 25, 2022. Miguel Gutierrez Jr., CalMatters
Mathew Garcia stands in one of his fallowed rice fields near his home in Glenn on April 25, 2022. Photo by Miguel Gutierrez Jr., CalMatters

If a good compromise leaves everyone dissatisfied, then the current situation in the Sacramento Valley is a textbook example — one where nobody wins and possibly everybody loses. As California’s drought intensifies, no one is guaranteed water: not growers with senior water rights, not endangered salmon, not the migratory birds that rely on wildlife refuges and rice fields as stopovers on their 4,000-mile-long winter pilgrimages to warmer climes, CalMatters’ Rachel Becker reports in this haunting story. Here’s a look at how the devastation is hitting each group:

Other environmental news you should know:

  • CalMatters’ drought and water tracker now includes data on urban water use.
  • Ahead of next year’s planned demolition of the first of four aging dams in the Klamath River, scientists are rushing to ensure fish and wildlife will thrive in the newly wild waterway crossing the California-Oregon border, the San Francisco Chronicle reports.
  • State regulators said two idle oil wells leaking methane near a Bakersfield residential neighborhood had been sealed as of Friday evening and didn’t pose a public health or safety threat, though local environmental groups remained unconvinced, the Los Angeles Times reports.
  • A possibly record-setting heat wave is slated to blanket much of Northern California early this week, renewing wildfire concerns as firefighters worked to finish mopping up two blazes in Solano and Mendocino counties that caused temporary evacuations over the weekend.

3 Bishops challenge sex abuse law as claims mount

A sexual abuse victim points to the photos of Catholic priests accused of sexual misconduct by victims during a news conference in Orange on Dec. 6, 20218. AP Photo/Jae C. Hong
A sexual abuse survivor points to photos of Catholic priests accused of sexual misconduct in Orange on Dec. 6, 2018. Photo by Jae C. Hong, AP Photo

Already inundated with hundreds of lawsuits alleging childhood sexual abuse stretching back decades, churches, schools and other youth-serving organizations expect to face hundreds more ahead of California’s Dec. 31 deadline for plaintiffs to file civil suits outside of the statute of limitations. Their liabilities could total hundreds of millions, if not billions, of dollars — as long as the U.S. Supreme Court doesn’t side with a group of Catholic bishops challenging California’s “lookback window” as unconstitutional, CalMatters’ Nigel Duara reports.

  • California opened a three-year lookback window in 2020, nearly two decades after it closed a similar one-year portal. During the first window, more than 850 people sued the Catholic Church, compared to 150 who sued other religious institutions, Boy Scouts of America and other organizations, according to the Los Angeles Times.
  • Bill Donohue, president of the Catholic League, told Nigel: “It is a myth to maintain that the Catholic Church has a monopoly on the sexual abuse of minors: it exists in every institution where adults interact with youngsters. The Catholic Church in California has twice dealt with this issue. It should not be subjected to another round of lawsuits.”
  • Jeff Anderson, an attorney who represents child sex abuse survivors suing the Catholic Church: “They are among the most frequent offenders, so yes, they are the most exposed (financially).”

In related news:

  • Salvatore Cordileone, the archbishop of San Francisco, told U.S. House Speaker Nancy Pelosi in a Friday letter that he is banning her from receiving communion “until such time as you publicly repudiate your advocacy for the legitimacy of abortion.” Pelosi has yet to comment on the letter, but Democratic state Sen. Scott Wiener called the archbishop’s actions “shameful,” adding, “he is deeply out of step with San Francisco and should be removed.”
  • The Catholic Church isn’t the only one challenging California law: Against the advice of San Diego’s city attorney and other staff, two city councilmembers want to push back on a state lawupheld by voters in 2020 — that prohibits government agencies from considering applicants’ race and gender when awarding contracts.

CalMatters Commentary

CalMatters columnist Dan Walters: As Newsom and lawmakers craft the state budget, they must contend with three uber-complex, voter-approved directives that largely dictate revenue distribution.

Klamath Basin dam removal needs a science-driven oversight plan: The basin is on the cusp of the most ambitious dam removal effort ever attempted, but little money has been allocated to fund the science needed to evaluate it, write Jeffrey Mount of the Public Policy Institute of California’s Water Policy Center and Peter Moyle of UC Davis’ Center for Watershed Sciences.


Other things worth your time

Some stories may require a subscription to read

California’s budget surplus is distracting. // Los Angeles Times

Southern California tenants struggle to find rentals as vacancies linger near 22-year lows. // Daily News

Mayoral rivals argue for progressive moves on homelessness. // Los Angeles Times

Silicon Valley city wants to build affordable housing at ‘the least likely place’: the street where VCs made billions. // San Francisco Chronicle

Freed California siblings feared opposing rundown housing. // Associated Press

California Leavin’: Cost of living, music culture main drivers of California migration to Nashville. // KTLA

Will Los Angeles elect billionaire Rick Caruso for mayor? // Los Angeles Times

Garcetti’s parents hire lobbyist to push for his ambassadorship. // Daily News

California’s schools chief could cruise to a second term, despite criticism. // Los Angeles Times

Cannabis licensing efforts tied to Anaheim corruption investigation. // Orange County Register

Former Sonoma State administrators’ accounts of sexual harassment raise questions about Sakaki’s response. // Santa Rosa Press Democrat

Former San Jose worker gets 35 years for molestation, massage parlor sex crimes. // Mercury News

‘Michael Jordan of COVID testing’: How these political operatives cashed in during the pandemic. // San Francisco Chronicle

An S.F. man said catalytic converter thieves pointed a gun at him. Why did it take police almost two hours to respond? // San Francisco Chronicle

Alameda County court system facing attorney shortage for many defendants. // Mercury News

Santa Clara County has its first competitive D.A. race in more than a decade. // Mercury News

California parents rise up against drug deaths. // California Healthline

California school bus driver charged with giving fentanyl to special-needs students. // Associated Press

Few arrestees in L.A. accept care, housing over charges. // Los Angeles Times

A diversion program has proved to keep young people out of jail. Why hasn’t it grown under Chesa Boudin? // San Francisco Chronicle

S.F. looks to calm its streets with Urban Alchemy, a nonprofit that hires the formerly incarcerated. // San Francisco Chronicle

A new nonprofit from Berkeley and Detroit aims to tackle reparations. // Berkeleyside

California tribal casino workers could be one step closer to unionizing under new ruling. // San Francisco Chronicle

The town at the center of California’s climate refugee crisis. // The Guardian

Companies fined $1.75M in worker death at Bay Area refinery. // Associated Press

How California bureaucrats are using a typo to destroy a fisherman’s dream. // Orange County Register

See you tomorrow


Tips, insight or feedback? Email emily@calmatters.org.

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