anderson forecast:
Economists project sluggish growth
BY WENDY SODERBURG
UCLA Today Staff
California’s economic growth has been slower than expected and
is likely to remain sluggish until well into 2004, according to economists
at the UCLA Anderson Forecast. In its quarterly report released on Sept.
24, the Forecast predicted “moderate-at-best” growth for the
national and state economies.
The state’s slow growth can be blamed largely on the continuing
loss of jobs, particularly in the Bay Area’s technology sector.
The loss came as somewhat of a surprise to UCLA’s economists, who
in June had expected the labor market to improve by now.
“The main difference between this California forecast and the
previous issue ... is the incorporation of a weaker pattern for growth
shown by recent data for the year 2003 to date,” said Anderson Forecast
senior economist Tom Lieser. “The employment reports for May through
August in California showed a pattern of continued job loss, not unlike
the decline seen for the rest of the nation.”
Still, Lieser is confident that the worst is over for California. The
trade and tourism sectors have stabilized, and the transportation and
health-services sectors continue to grow, he said. Even the technology
industry is showing some improvement, although UCLA analysts predict that
continued weakness in Northern California will offset modest gains in
the Southland.
Edward Leamer, director of the Forecast, writes that the best the country
can hope for in 2003 and 2004 are gross domestic product growth rates
near 2.5%, with rates in the 3%-3.5% range in 2005. In the past, post-recession
recoveries have experienced rates in the 4.5%-5% range.
“This type of recovery could occur only if some area of economic
spending goes to super normal growth,” Leamer said. “Business
investing has returned to normal, but it is not enough to push the growth
rate to higher levels.”
The employment outlook for Los Angeles County remains relatively optimistic,
according to Anderson Forecast senior economist Christopher Thornberg.
He projects that the county will add 64,000 jobs in 2004 and 83,000 jobs
in 2005, with the strongest gains expected to occur in business services,
education and health services. |
