A lot worse, unfortunately. Unemployment is, after all, a lagging indicator. Companies don't start laying people off until they've digested the impact on their bottom line, and they won't start rehiring in bunches until they sense the economy is dynamic enough to support investment as expensive and long-term as a new employee. Even optimists are talking about the economy not rounding the corner until this fall, which means we could still be a year from the crest of this chart (data from DLS):
At first glance, it looks like unemployment in California could be rounding out after a couple brutal months, but then again, during the summer of 2008 when the bank crisis came into focus on Wall Street, California's empoyment seemed to stabilize before skydiving in December and January.

And there is reason to believe the state could face another wave of credit woes. Southern California has been hit especially hard by the mortgage and credit crisis after years of over-development. As we reported earlier today, analysts expect a second wave of bank trouble as the housing crisis bleeds into the commercial real estate market, an industry that was critical to California's boom during the easy credit days and wil be essential to its comeback.

With that in mind, Michigan's nation-leading 12.6% unemployment rate doesn't seem completely out of reach.