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Los Angeles should start to catch up on its economic recovery in 2012 and 2013, according to LAEDC economists.
The Kyser Center for Economic Development, part of the Los Angeles Economic Development Corp. (LAEDC), has just released its 2012-13 mid-year forecast for the nation, the state, and various metropolitan regions in the Southern California. The data contained in the report is considerable, so I'm going to focus on the national and regional picture in this post, with an emphasis on Los Angeles County.
The Kyser economists aren't predicting a recession in 2012 or 2013. But they do anticipate sluggish, subpar growth: 2 percent GDP growth in the U.S. for this year, and only 2.2 percent growth for next year. They don't see the unemployment rate falling nationally by much over the next two years. It's currently at 8.3 percent — and by the end of next year, it will be at 8 percent.
There's a very big however in all this fairly grim prognostication: inflation should remain low for the 2012-13 period. This means that we're not seeing a repeat of the dreaded "stagflation" of the 1970s, when we had weak growth, high unemployment, and prices rising through the ceiling. What's happening now is different: the economy is wading through muck and mire, struggling to make any gains, and people have become so frustrated with the job market that they're dropping out completely, possibly never to return. I call this this "stuckflation." This is an economy that isn't tipping into recession, but that can't gain any momentum.
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Job seekers attend an orientation meeting inside the church during Los Angeles Mission's 11th annual Skid Row Career Fair. The UCLA Anderson Forecast doesn't see the employment situation for big parts of the state's labor force improving for another year.
I normally dig pretty deeply into the economic forecasts that are put out by business schools at places like UCLA and Cal State Fullerton, but this time around the UCLA Anderson Forecast for the second quarter of 2012, I'm going to take a more topline approach. I'm going to chop things up into several posts.
Anderson Forecast Director Ed Leamer noted in his national overview that the U.S. is undergoing some big structural changes. We're shifting from an industrial to a post-industrial world. That means any job that can be outsourced, done by a robot, or accomplished by a microprocessor will be. We can't expect the U.S. economy to provide jobs for under-educated workers any longer. Two bubbles — dot.com and housing — masked our weaknesses.
But things are going to be different in the future. We need to adjust. But it's going to take time. And we shouldn't expect a lot of growth now or in the immediate future. The Anderson Forecast team is predicting 2.4 percent national GDP growth by the end of 2013, which is pretty modest. But we were at 1.9 percent in the first quarter of 2012, after doing 3 percent in the fourth quarter of 2012 but only 1.7 percent on average for the year.
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A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC. The Labor Department will release its May jobs report tomorrow morning.
The Labor Department is scheduled to release its monthly national jobs report at 8:30 a.m Eastern Time tomorrow morning, and I'll be on my usual dawn patrol to parse the data when it hits.
But in the meantime, here's a preview. The Bloomberg consensus of economists anticipates that 150,000 new jobs were added in May. That would be a moderate improvement over April’s 115,000 (which could be revised up, if the trend continues from the past few months). But it’s still well below the 200,000-plus level that we’d like to see, coming out of a strong fourth quarter in 2011 and an optimistic first few months in 2012. And it’s far below the 300,000-plus (really more like 400,000) we need to bring the unemployment rate down and restore the millions of jobs lost in the Great Recession.
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Job seekers wait in line to enter the San Francisco Hire Event job fair on November 9, 2011 in San Francisco, California. There's been a drop-off in new jobs as winter turns to spring.
"Little changed, little changed, little changed." That's the mantra from today's April jobs report from the Labor Department. It's not horrible: the economy added 115,000 jobs last month and the unemployment rate fell to 8.1 percent from 8.2. But economists were expecting more like 160,000. The modestly good news is that the initially rather disappointing March number was revised up to 154,000 from 120,000. This continues a trend of upwards revisions. February was also revised up, again, to nearly 260,000.
Unfortunately, the trend that isn't continuing is monthly job growth above 200,000 new jobs added each month. That pace would translate into GDP growth — a general measure of how well the economy is doing — in the 2.5-percent ballpark. That's not the 4-5 percent you'd expect in a "normal" recovery, but it also isn't the meager 1.7 percent we averaged in 2011, when the economy endured several shocks that kept us on the edge of a double-dip recession.
Here's my weekly segment on "America Now with Andy Dean." After a few minutes of banter about what a big Andy fan my mom has become, we get right to it: the March jobs report from the Labor Department.
Andy notes that if you compare Ronald Reagan's first term to Obama's, at about the same point for both presidents coming out of a recession, Reagan's economy was achieving 6 percent GDP growth while Obama's is barely managing 2 percent. Fair enough, but the Reagan recovery was the result of Paul Volcker, when he was Fed Chairman, inducing a recession to break the back of late-70s stagflation. He raised interest rates to a high of 20 percent to accomplish this. But by the end of Reagan's first term, the rates had been substantially cut. Combined with the the usual post-recession dynamics, this delivered pretty juicy GDP growth.