It is understandable that some of California's lawmakers are frustrated that the fiscal stimulus didn't make California's unemployment problem disappear. But California's unemployment problem reflects more than just aggregate demand. It is a function of the State's business climate, the competitiveness of its own firms, among other variables.
California's having a higher unemployment rate than the nation is not a new situation. Since the Bureau of Labor Statistics provided state unemployment data beginning in 2000, California's unemployment rate has exceeded the national rate in every year.
California vs. U.S. Unemployment Rates:
2000 4.9% vs. 4.0%
2001 5.4% vs. 4.7%
2002 6.7% vs. 5.8%
2003 6.8% vs. 6.0%
2004 6.2% vs. 5.5%
2005 5.4% vs. 5.1%
2006 4.9% vs. 4.6%
2007 5.3% vs. 4.6%
2008 7.2% vs. 5.8%
2009 11.4% vs. 9.3%
2010 12.5% vs. 9.7% (February)
Los Angeles, San Francisco, and San Diego also experienced massive real estate bubbles. Those bubbles, fueled by leverage, have burst. Given the amount of debt that was involved, that has also created a drag on California vis-a-vis some of the other states that did not experience comparable real estate inflation. The stimulus was aimed at shoring up aggregate demand. It was not designed to bail out the household sector nor reinflate the housing bubble. Hence, even with the fiscal stimulus, California has likely experienced greater deleveraging on account of the steeper fall in previously excessively inflated real estate prices. As a result, the gap between California's and the national unemployment rate is wider than usual. Moreover, it may take longer to narrow, especially if California suffers from additional chaotic budget crises.
“If we must have an enemy at the head of Government, let it be one whom we can oppose, and for whom we are not responsible, who will not involve our party in the disgrace of his foolish and bad measures.”
- Alexander Hamilton. Spiritual father of #NeverTrump