Steady but Tepid Growth for California in 2010
Economists believe that California will grow at a slower rate than the rest of the nation this year as construction jobs continue to shake out.
Sluggish growth in 2010 is expected as the state’s local governments downsize and consumer spending remains light, according to an economic forecast released on June 15 by UCLA’s Anderson School of Business.
In addition, unemployment will remain high in the Golden State and not dip below double-digit figures until 2012. In April, it stood at 12.6 percent and is not expected to fall below 12.1 percent before the end of this year.
From December 2009 to April 2010, California added 63,900 private-sector payroll jobs. While this is good news, it pales compared with the nearly 1.4 million private-sector payroll jobs lost during the recession.
“It is going to be slow growth, and the big reason for that is consumption is a large part of economic activity. And consumers are really coming back pretty slowly,” said Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast. “We are certainly not back to 2007 when it comes to the volume of retail sales. Consumers are rebuilding their portfolios and balance sheets. This recession hit pretty hard, and people are trying to make sure they have adequate reserves. While the economic news is good, it is not euphonious news.”
The forecast for the next three years is slightly weaker than the UCLA Anderson Forecast that came out in March. Still, in 2011 and 2012, industries such as healthcare, business services, exports, construction and technology-related industries should generate more-robust growth in the state.
With its port and export/import-driven industries, the Los Angeles area is expected to show a quicker recovery than the rest of the state. “Between L.A.’s air and seaports and its housing market, the evidence is building that a recovery is underway. Exports turned the tide first and provide the most natural engine for recovery, with housing now showing signs of a recovery as well,” noted UCLA Anderson economist Julia Thornton Snider. “Job growth is the necessary next step, and the forecast says that it will start to revive this year, although unemployment will remain partially high through 2012.”—Deborah Belgum
