UCLA economists see signs of recovery for state
BY WENDY SODERBURG
UCLA Today Staff
California’s economy is showing signs of recovery despite
the Bay Area’s woes, according to the UCLA Anderson Forecast’s
latest report.
“This recession appears to be over, but the growth path
is modest,” said senior economist Joseph Hurd, co-author of
the quarterly UCLA Anderson Forecast. “We have seen job growth
for a few months, taxable sales are stronger and housing continues
to be strong, both in sales and construction.”
The Bay Area, particularly San Jose, San Francisco and Oakland,
bore the brunt of the recession when the technology bubble burst
three years ago, but Hurd said new biotech surges in fields such
as preventive medicine could rapidly resuscitate its economy.
In addition to education and health services, the strongest sector
of the state’s economy will be the financial services sector,
which has been fueled by a booming real estate market and a rise
in financial planning.
Home prices, supported by a collapse in interest rates, are “still
way high,” Hurd said. As of January, the median price for
a single-family home in California reached $405,721. The market
continues to sizzle, but strong growth in homebuilding should ease
some pressure on home prices, he said.
Hurd cautioned, however, that the state still must confront budget
cuts that will reduce public sector jobs by 25,000 over the next
15 months. Escalating gasoline prices and a weak dollar will make
imports more expensive.
In Los Angeles, job growth will be concentrated in professional
and business services, health care, and leisure and hospitality,
said Christopher Thornberg, senior economist with the Anderson Forecast.
Approximately 15,000 jobs have been added in Los Angeles County
since October 2003, prompting Thornberg to predict 1.2% payroll
job growth for the county this year.
Nationally, an expanding economy will be fueled by increased business
capital spending and exports, said senior economist Michael Bazdarich
of the Anderson Forecast.
“Consumer spending and housing have already had their run,
and government purchases (such as defense) are set to flatten out
or decline,” Bazdarich said. “With other drivers out
of gas, the economy will move as fast as capital spending and exports
can drive it.”
The Anderson Forecast released the report March 25.
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