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Now, to one of the states hardest hit by the housing meltdown. California released its latest jobs numbers last week, and the picture isn't pretty.

Rachael Myrow of member station KQED has more.

RACHAEL MYROW: Call two economists and you'll get three opinions about the health of California. Christopher Thornberg of the consulting firm Beacon Economics believes the state's in recession. Thanks to the housing bust, he says, Californians can't use their home equity as a giant credit card anymore.

Mr. CHRISTOPHER THORNBERG (Economist, Beacon Economics): Consumers have to get their spending back in line with their regular income. And that is not a process that's going to occur seamlessly. That's a process that's going to create a lot of turmoil in the economy. And it's that kind of turmoil that creates these recession-type scenario.

MYROW: But in urban coastal counties like San Francisco and Los Angeles, housing prices still hover in the stratosphere, and major industries like trade, technology and tourism still chug along.

Economist Ed Leamer of UCLA's Anderson School of Management says all this talk of recession is overblown.

Mr. ED LEAMER (Economist, UCLA Anderson School of Management): California is very large, about 11 percent of the nation, both in terms of the jobs and in terms of production. So that's a huge economy. Few countries have this big, you know, employer basis or production levels as California does.

MYROW: In a play on the Las Vegas slogan, Lamer insists, what happens in housing will stay in housing. Still, California's unemployment rate was 5.9 percent in January. That's up from 5 percent in January last year. But Lamer notes most of the job losses are connected with housing, either in construction or financial services. That jibes with what some people, even in the hardest-hit counties, are saying. They argue the housing market was rife with speculation, and home prices were unsustainable.

Like John Marshall(ph), a home inspector in Vallejo - he says his business is half of what it was two years ago.

Mr. JOHN MARSHALL (Home Inspector): Granted, it's difficult, but the people who jumped into it for easy money are gone just a few months ago. And you couldn't hardly watch a daytime TV program without watching how to become a home inspector and, you know, in six easy lessons.

MYROW: Marshall is making due picking up business from washed-out home inspectors, and serving as an expert witness and consultant in housing transactions.

Eric West(ph) used to work for Countrywide, the massive lender whose high-profile troubles focused even more attention on the subprime mortgage meltdown. Five years ago, West helped this reporter into an adjustable rate mortgage. West says he did not do the now-reviled subprime mortgages and had no idea Countrywide was headed for trouble when he left voluntarily last August.

Mr. ERIC WEST (Employee, First Rate): It's slow, but you have to adapt to it.

MYROW: Now, West works with a small mortgage outfit called First Rate, doing half the business he was doing a year ago.

Mr. WEST: You know, it'll start to pick up again and we'll all be the better for it, having gotten through this. So you just have to, you know, be able to stay positive as much as you can.

MYROW: Economists note California's winter jobs numbers look deceptively bad, in part because of the temporary blip that was the Hollywood writers strike. Nearly 20,000 of the roughly 76,000 jobs lost in L.A. County in January were in the category that includes film industry and sound-recording workers.

Most writers, dry cleaners, animal handlers and the like are expected to be back to work soon if they're not already, like screenwriter Peter Beagan(ph).

Mr. PETER BEAGAN (Screenwriter): Everything that I had going on just came to a complete halt. And that included any pay that I was getting. That also came to a complete standstill, so that feeling of the looming doom was over.

MYROW: At the very least, California seems to have entered a period of sober clarity, even if it's not exactly clear what the answer is to the question: Are we in a recession or not?

For NPR News, I'm Rachael Myrow in San Francisco.

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