Slowing Economy Seen in California Next Year
Economists at Chapman University predict that higher inflation rates, higher interest rates and a slower rate of job creation in California will impact consumers until the end of 2006.
The A. Gary Anderson Center for Economic Research at Chapman University in Orange, Calif., made the predictions in an updated forecast for 2005 and 2006.
Researchers noted that state employment is expected to increase 1.5 percent this year, creating 218,000 jobs, and only 1.1 percent next year, with 163,000 jobs added to payrolls.
“A slow rate of job creation, higher inflation rates and higher interest rates will negatively impact real personal income and taxable sales over the remainder of this year and 2006,” economists wrote.
Personal income is forecasted to increase by 5.8 percent in 2005 and 4.3 percent in 2006.
On an upbeat note, economists expect the state’s manufacturing sector to improve. “After three years of decline, year-over-year percentage changes in manufacturing jobs turned positive in July of 2004, and the sector has shown slow but steady job growth over the last 10 months,” the report said.
The Chapman economists predicted that housing prices will cool during the last quarter of this year and will decline 4.9 percent next year. —Deborah Belgum
