California’s economy is expected to undergo slow economic and employment growth over the next few years, lagging behind the United States in certain sectors -- such as the housing market -- but moving upward nonetheless, according to two economic reports released Tuesday. Conan Nolan reports for the NBC4 News at 5 p.m. on June 20, 2012.
California’s economy is expected to undergo slow economic and employment growth over the next few years, lagging behind the United States in certain sectors -- such as the housing market -- but moving upward nonetheless, according to two economic reports released Tuesday.
Experts predict the U.S. economy will experience slow GDP and employment growth in 2012 before facing an accelerated upward trend in 2013 and 2014, according to the UCLA Anderson School of Management’s June report.
Meanwhile, the report stated that California will not see unemployment figures drop into the single digits until 2013, and will drop to 8.3 percent in 2014 -- 1 percent higher than the report's forecast of the U.S. economy.
California's unemployment rate as of May 2012 rests at 10.8 percent, according to the U.S. Department of Labor.
The Los Angeles economy is also expected to recover slowly, though at a rate behind California’s average, according to a report from Beacon Economics (PDF). Los Angeles County’s unemployment rate is not expected to dip below 8 percent until late 2015 or early 2016, the Beacon report stated.
Still, Beacon economists remain positive about the future, citing the economy's growth -- though slow -- as a promising sign. Their report reflects that attitude and paints a rosier view of the economy.
"I think the current panic regarding what’s happening to the economy is a little overblown," said Christopher Thornberg, a founding partner of Beacon who contributed to the report. "The important thing here is not so much the number itself but the context of the number ... The point of our view is, the economy’s growing."
Thornberg said the misplaced perceptions about the economy have been fueled by the upcoming presidential election, as politicians on both sides assert that the "economy is broken and they have the magic formula to fix it."
He added that the private sector “is doing just fine,” echoing remarks made June 8 by U.S. President Barack Obama that received widespread criticism among political opponents.
The Beacon report said over the past two years, the national economy has witnessed a 5 percent increase in private-sector output and 3.5 percent increase in private-sector employment.
David Shulman, a UCLA economist and co-author of the Anderson report, brought up concerns about the state economy.
Shulman said he expects unemployment to stay "painfully" high amidst predictions that California’s unemployment level will not reach single digit levels until 2013.
"The basic theme is California is about six months behind the U.S. and LA is probably another three months behind California," he said.
His report cited "specific California reasons" for the state’s slower growth, including an increase in demand for multi-family housing in coastal California -- which are in more densely populated areas that "require more time to bring to fruition" -- and higher unemployment that slow household formation.
The report notes that the bulk of economic growth in the state continues to come from private companies, particularly the high-tech sector. Silicon Valley in Northern California has been creating jobs at twice the national average.
The problem for LA County, said UCLA economist Ed Leamer, is the failure to prepare young people for those kinds of jobs.
"We've not been doing a great job when it comes to putting in our young kids the kind of skills that will get them good jobs anytime soon," Lemer said.
In addition, the Anderson report said it expects California’s residential construction industry to begin a strong recovery in 2013.
The report said it did not find "objective evidence" that the market will turn, despite acknowledging promising signs, including a slowing decline in housing prices and decline in the number of foreclosures.