December 08, 2011
UCLA Anderson Forecast Sees Continued Slump But No Double-Dip
California economy growing slowly
LOS ANGELES -- In its fourth quarterly report of 2011, the UCLA Anderson Forecast's outlook for the nation sees GDP growth at a "below trend rate" for the next five quarters. Specifically, the Forecast calls for a 2% growth rate for the current quarter and a sub-2% growth rate for most of 2012. Further down the road, GDP is forecasted to exceed 3% in 2013 as a number of contractionary forces continue to abate. Despite the tepid numbers, the current national forecast is actually more optimistic in tone than the preceding forecasts of June and September. In California, the current forecast is for the recent surge in employment to abate while slow growth persists on average through 2012. The rest of the United States, the state's international trading partners and consumer purchases will combine to generate faster growth in 2013.
The National Forecast
In his December 2011 report, UCLA Anderson Forecast Senior Economist David Shulman notes that despite a modestly growing GDP, the nation's labor market remains mired in a long slump. In an essay not-coincidently titled "The Long Slump," Shulman notes that next year will mark the fourth year in a row with an unemployment rate exceeding 9%, the worst performance of the postwar era. "Put simply," Shulman writes, "there are currently 25 million Americans looking for fulltime work." And while the forecast calls for job growth on the order of 150,000 per month, total payroll employment will still be three million jobs below the 2007 peak and real personal income is still below the level reached in 2008.
That said, Shulman points out that recent economic data has improved - taking the threat of a double-dip recession off the table. Still, the forecast calls for real GDP growth at below trend rate for the next five quarters.
In his conclusion, Shulman writes "The United States is facing an unemployment crisis in a slow growth economy. A modestly growing GDP on the order of 2% will not be sufficient to lower the unemployment rate much below 9% through 2013. Furthermore, government policy seems to be incapable of noticeably improving the situation. Indeed, the Federal government will be reducing purchases during the forecast period. The economy will be sustained by modest increases in consumption and business investment along with the beginnings of a housing recovery in 2013."
The California Forecast
In the California report, Senior Economist Jerry Nickelsburg takes note of some of the positive signs in the recent data being reported regarding the state's economy. "... the September employment numbers, released in late October, turned out to be a pleasant surprise," Nickelsburg writes. "Although other indicators did not predict stronger growth in payroll employment, there it was. October job growth has followed course, yielding the first signs of a nascent new recovery." In a report titled, "California: Recovery Part Deux?" Nickelsburg wonders if these positive signs portend a strong recovery, then says that a weak national and international outlook does not suggest that the recovery will be robust. "What is important," Nickelsburg writes, "is that the last two months have yielded both job growth in excess of the U.S. rate and job growth which is widespread throughout the state."
The California forecast is similar to that of September. Employment growth of 1.4% and 2.1% is expected in 2012 and 2013 respectively. Payrolls will grow less rapidly at 1.4%, 1.2% and 2.0% for the last two forecast years. Real personal income growth is forecast to be 3.9% in 2011, followed by 2.6% and 2.1% in 2012 and 2013 respectively. The unemployment rate will hover around 11.6% through 2012.
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.
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