Consumer spending across California has plunged in the wake of Wall Street's turmoil and payrolls have been thinned at a rapid pace in recent months.

The global economic slowdown has also forced layoffs across California, notably in its Silicon Valley high-technology hub. The world's eighth largest economy is also stuck in a prolonged housing downturn. Parts of California have had some of the highest foreclosure rates in the nation.

"There is continued weakness in housing-related sectors and we're also seeing weakness in consumer-related sectors," said Kevin Callori, a spokesman for the state's Employment Development Department. "The credit crunch is making consumers less confident so that's affecting businesses in wholesale and retail trades."

"Basically about a third of the losses (over the past year) have been in consumer-oriented industries," Callori said. "Another third have been in housing and housing-related industries like construction and financial services."

State officials said California lost 79,300 nonfarm payroll jobs in January from December and a total of 494,000 nonfarm jobs from a year earlier, or 3.3 percent of the state's nonfarm payrolls.

Schwarzenegger last week signed a state budget plan to close a $42 billion shortfall through July 2010, a first step for the state to resume selling general obligation bonds for financing infrastructure projects, including water projects to help the state contend with droughts.

The state faces its third consecutive year of drought, which may impose $3 billion in economic losses this year, Schwarzenegger's office said in a statement on Friday.

State Treasurer Bill Lockyer aims to sell general obligation debt as soon as possible. That may also allow the state to resume funding public works projects halted during budget talks that dragged on for more than 100 days.