California's economy may begin to pick up steam by next summer when job layoffs in the defense industry bottom out, according to Bob Smiley, dean of the Graduate School of Management at UC Davis. The state's recession has been led by the defense-driven devastation of its aerospace industry and manufacturing sector. "Job growth is occurring in California but more slowly than the growth in population, which is why we're seeing an increase in the unemployment rate," says Smiley. "Job creations in the small- and medium-sized businesses in California will eventually be greater than the number of layoffs that are now happening." The business school dean believes that smaller firms are more important than larger firms in moving the economy. No region of the state is showing significant economic growth; however, Northern California is slightly better off than its neighbors in the south, notes Smiley.