November 29, 2007

UCLA Anderson Forecast Report: A Reality Check on the Economic Impact of the Writers Strike

Jerry Nickelsburg believes some early estimates are "grossly inflated"


LOS ANGELES - UCLA Anderson School of Management today released a forecast report on the economic impact of the current WGA strike which contains results that differ from widely-published estimates.  The report, written by UCLA Anderson Forecast economist Jerry Nickelsburg, concludes that, even if the strike were to last through the end of March, the economic impact on the Los Angeles economy would be about $380 million rather than the prevailing estimate of $1 billion. 

"Virtually everywhere in the media, in City Hall and in Sacramento this greater than $1B economic impact is taken as fact," states Nickelsburg. "But what is behind it and how much faith can we put in this number?  Is there a serious public issue for the Los Angeles economy worthy of governmental intervention?  As it turns out, a close examination of the economic dynamics of the 2007 WGA strike suggests a much more modest and transitory impact on the Los Angeles economy.  The impact, even if the strike runs as long as the record 1988 strike, will be about  1/3 or less of the currently accepted one billion dollar estimate."

Claiming that the initial estimates have been "grossly inflated," Nickelsburg reasons that the $1B figure is missing some key elements - the inventory effect, the substitution effect, and the composition effect.  To view the full report, go to: http://www.anderson.ucla.edu/documents/areas/adm/media/UCLAAnd_StrikeImpact.pdf.

About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state’s rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. Visit UCLA Anderson Forecast on the Web at http://uclaforecast.com.

About UCLA Anderson School of Management
UCLA Anderson School of Management, established in 1935, is regarded among the very best business schools in the world.  UCLA Anderson faculty are ranked #1 in "intellectual capital" by BusinessWeek and are renowned for their teaching excellence and research in advancing management thinking.  Each year, UCLA Anderson provides management education to more than 1,600 students enrolled in MBA, Executive MBA, Fully-Employed MBA and doctoral programs, and to more than 2,000 professional managers through executive education programs.  Combining highly selective admissions, varied and innovative learning programs, and a world-wide network of 35,000 alumni, UCLA Anderson develops and prepares global leaders.

Contact Information

Allison Holmes, (310) 825-9983, allison.holmes@anderson.ucla.edu

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