The lingering aftereffects of the “Great Recession” will continue to be felt throughout California and across the U.S. in 2013 but there is light on the horizon, according to the latest UCLA Anderson Economic Forecast. The third quarter report, put out by UCLA’s Anderson School of Management, states that slow growth is expected through next year, but that the economy is expected to pick up in 2014.
UCLA’s economists contributing to the report found that California would mostly reflect the national trends, but trail slightly in employment gains in 2012, with increased growth during the full forecast period through 2014.
Dubbed the “muddle-through economy” by David Shulman, a senior economist who contributed to the Anderson Forecast’s national economic report, current U.S. conditions continue to demonstrate very slow growth upward from the lowest economic point in mid-2009. Real GDP growth has averaged between 1 and 3 percent over the past three years, and economists expect it to settle at 1.3 percent for Q3 2012, rising to 1.5 percent in the fourth quarter. The figure is expected to continue to rise in 2013; however, significant economic growth above 3 percent is not expected until 2014, assisted by the construction sector and a rebound in exports.
Shulman says the extended period of subdued growth accounts for the season of uninspiring employment gains, which has kept the national unemployment rate above 8 percent for the past three and a half years. Schulman acknowledged in his report that that trend is unlikely to be reversed in the next 12 months.
“With several quarters of 1 to 2 percent growth ahead of us we do not expect the unemployment rate to dip below 8 percent on a quarterly basis until the first quarter of 2014,” Shulman said. “Simply put, job growth on the order of 160,000 a month in 2013 will not be sufficient to make any real dent in the unemployment rate. However, as job growth accelerates to 200,000 a month in 2014, the unemployment rate will begin to meaningfully improve.”
Shulman says that the anticipated growth will be fostered by the “lone bright spot in the economy,” the home construction industry, which is already showing signs of a rebound.
On the subject of the state’s economic position, Jerry Nickelsburg, senior economist on the California side of the report, writes that our coastal state’s exports drive a large portion of economic and employment growth. “While California’s exposure to the international economy is substantial, the sensitivity of the California economy to international risk is only marginally above the national risk,” Nickelsburg said in his report.
Chapman University presents 2012 Midyear Economic Forecast
SoCal indicator increases in second quarter
The Bottom Line ~ Dispatches from the road: a Greek drama in real time