One year ago, Dr. Anil Puri, dean of Cal State Fullerton’s Mihaylo College of Business and Economics, predicted brighter economic days in 2011, particularly in the final two quarters.
"So where is the boom?" asked Puri in front of the sold-out crowd at the Hyatt Regency Irvine. "Well, a few things got in the way."
Despite repeated assurances from market analysts that the "great recession" officially ended a little more than two years ago, the flat rate of recovery, unenthusiastic consumer spending, and lackluster employer hiring coupled with long-term unemployment, are all factors that contribute to a sustained atmosphere of economic inertia.
Puri said the recovery has been stalled because of myriad of factors including turmoil in the Middle East that has pushed oil prices higher; the Japanese earthquake in March, the end of the federal stimulus money and the summer-long debate in Congress over the debt ceiling and the negative impact on consumer confidence that has chilled personal spending. Moreover, Puri warned that the continued housing crisis, a growing number of states and local municipalities facing budget shortfalls and persistent unemployment has compounded the challenges facing the U.S. economy.
"Add it all up and we are in for a long, tough slog," Puri said. "It is going to take several more years before we see a return to some sort of normalcy."
Puri's colleague, Dr. Mira Farka, associate professor of economics at the Mihaylo College, went further and predicted that it could be 2019 before the nation's unemployment rate returns to pre-recession levels. With the need for an average of 125,000 new jobs per month just to meet the ongoing employment demands, Farka said it would take an average of 200,000 jobs per month through the end of the decade to restore most of the jobs lost in the past three years. The Cal State Fullerton economic professor said the housing crisis has worsened the unemployment picture because workers can't move due to their homes not selling.
"To get back to normal, we need to create 21.5 million jobs," Farka said.
Recently, Southern California’s economic profile has been following very close to national indicators, an unusual phenomenon in and of itself. Orange County’s August unemployment rate mirrored the national average at 9.1 percent, while the regional Southern California unemployment rate overtook the state average, at 12.4 percent. The local medical research, high tech, and tourism and hospitality industries, usually cornerstones of Southern California’s economy, have had no noticeable positive effects during these rough times of flat recovery.
Prospects for employment growth –– when the economy begins to turn around –– are likely to return to these tradition sectors, as well as a newcomer, the clean tech and renewable energy industry.
Groups like the Southern California Clean Tech Alliance (a coalition of CleanTech Los Angeles, CleanTech San Diego and CleanTech OC) seek to establish a springboard for emerging green technology innovators and to promote the sustainable industry, both for the future of the state and to create jobs.
Both Puri and Farka predicted that it is likely more social unrest lies ahead as government and corporate America wrestles with ways to improve the economy. The "occupy" movements are going to be part of the landscape as the unemployed or partially employed grow increasingly frustrated. The situation will worsen, they agreed, if the two major political parties are unable to reach accords and set policy to stimulate growth and restore consumer confidence.
Unfortunately, Puri said it is unlikely we will see much change in Washington until after the next presidential election.
Caitlin Adams contributed to this article.
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