California has a massive jobs engine that drives its economy. Whether in tech, agriculture, entertainment, construction, healthcare, finance, education, or any of the other areas in the state, companies employ many millions, and use vast amounts of commercial real estate in the process.

A rise in unemployment suggests that companies feel pressure and will eventually pare back other areas of spending, including leases for retail stores, factories, offices, and warehouses. People who are out of work will have less to spend on housing, whether multifamily or individual homes.

The February 2024 State Employment and Unemployment report from the Bureau of Labor Statistics shows that California's unemployment rate has been growing over the last year significantly in excess of the 3.9% national average. In February 2024, the seasonally adjusted number rose to 5.3%, the highest for any state in the country. The change from the year before — 0.8 percentage points lower at 4.5% — was one of the largest in the country, exceeded only by Connecticut, Maine, and Rhode Island.