The Breakdown

Explaining Southern California's economy

UCLA Anderson Forecast: California's economic divide is widening

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California's economy has developed a widening jobs gap between coastal and inland regions,  according to the final UCLA Anderson Forecast of 2013, released Thursday.

Overall, the forecast says California's unemployment rate will finish 2013 with an average of 8.9 percent, and that will fall to 8.2 percent next year.

"Along the coast from Marin to San Diego, including a sliver of Los Angeles County known as the Westside/Silicon Beach, California employment gains are outpacing the U.S.," UCLA senior economist Jerry Nickelsburg writes. "But move off the coast and the situation is quite different."

The sectors that inland California has long relied on for jobs — government, logistics, manufacturing and residential construction — continue to decline, writes Nickelsburg.

He cites an energy boom in Kern County and the new medical school at the University of California, Riverside, as exceptional bright spots in the inland California economy, but his report — entitled "Californillachia?" — compares the inland regions to "the Appalachia of yore, anemic to no growth and dominated by lower wage employment."

The national outlook

Despite self-inflicted wounds, growth of the U.S. economy is tepid at the moment, but by next spring it should be far stronger, according to the Anderson forecast.

Those self-inflicted wounds, the forecast states, are the 16-day partial shutdown of the federal government and the troubled rollout of the Affordable Care Act.  

In the current quarter, the forecasts says Gross Domestic Product (GDP) is growing at rate of 1.8 percent, but by the second quarter of 2014, real GDP will be on a sustained path of nearly twice that, 3 percent.

"In this environment employment will be on track to add about 200,000 jobs a month and the unemployment rate will decline to about 6 percent by the end of 2015," writes Senior Economist David Shulman.

The forecasters do not expect a boom in consumer spending in the near future, but predict the housing and automobile sectors will help nationwide economic growth along.  

They predict an increase in housing starts from an estimated 913,000 this year to 1.25 million next year, and  1.44 million units in 2015. Light vehicle sales, they say, are rebounding to pre-recession levels.

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