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A construction worker cuts a piece of wood on the top of a home under construction at a new housing development on in Petaluma, California. A recovery in housing is developing in the state, according to UCLA economists. But it's geographically uneven.
For a while now, the economists at the UCLA Anderson Forecast have been arguing that California is experiencing a two-track economic recovery from the Great Recession. The coastal side of the state is doing relatively well, while the inland regions are struggling. Other economists dispute this analysi; they maintain that the recovery is more robust in Northern California than it is in the Southern California.
A key lens to look through when trying to figure out which analysis is right (and really, both have some merits) is real estate. The UCLA Ziman Center for Real Estate and the Anderson Forecast have just released an brief report on the housing situation, written by economist Jerry Nickelsburg. He notes that prices appear to be moving up in California:
The aggregate California home price statistics are encouraging....The S&P Case-Shiller
Index for San Diego, San Francisco and Los Angeles is the highest it has been since June 2011 and the median sales price is now the highest since 2008.
The Port of Long Beach, together with the neighboring Port of Los Angeles, are critical hubs for California exports.
It's not really correct to do this, but you can compare the economy of California to the economy of an entire country. If California were a country, it would be the world's ninth largest, at about $2 trillion, according to some data compiled by the LAEDC. This sounds great — Bravo, Golden...Nation! — but as we learned from the most recent UCLA Anderson Forecast, released this morning, this means that global economic events can affect California more than other U.S. states, and even entire U.S. regions.
This from Anderson Forecast economist Jerry Nickelsburg's contribution to the report, "California Exports: How Much Do They Matter?", in which he considers the impacts, both positive and negative, that exports have on the state economy:
How sensitive is the California economy to changes in the world economy? ...Chinese growth, if not negative, is in retreat. In many parts of Europe, growth is indeed negative as a double dip recession has set in and the future of the Eurozone remains a risk of our U.S. forecast. As it turns out, California has considerable exposure to China and Europe. Together they make up one quarter of all direct exports from the state.
An AT&T technician works on fiber optic cables used for the expansion of AT&T U-verse Internet service in the Chinatown neighborhood in Los Angeles. We have jobs in Southern California, but we're not doing as well as Northern California. Why? The SoCal economy has some structural problems.
Yesterday, Pepperdine University’s Graziadio School of Business, in partnership with Beacon Economics, released its outlook for the California economy—exactly one day after UCLA’s Anderson Forecast came out.
Beacon principal and founder — and frequent KPCC guest on "Airtalk" and "The Patt Morrison Show — Chris Thornberg gently ribbed the Bruin economists. "Yesterday was the rookie game," he said. "Today in the slam-dunk contest!"
The Anderson Forecast for the U.S., California, and L.A. economies is cautiously optimistic. Pepperdine and Beacon are more bullish.
But there is one big difference between the two forecasts, and it comes down to an analysis on the changing — or not changing — economic geography of the state.
The UCLA economists say that California is two states — the recovering coastal regions and the still-depressed inland areas. A cratered housing market and unemployed construction workers are what’s holding back inland California. Meanwhile, in the Bay Area, Silicon Valley is hiring.
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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.
Photo by Chris Radcliff via Flickr Creative Commons
The UCLA Anderson Forecast released a cautiously optimistic outlook for the U.S. and regional economies.
The UCLA Anderson Forecast just released its second quarterly report for 2012, and the outlook for the U.S. economy is a continued slow recovery from the Great Recession.
At the heart of the report is Anderson Forecast Director and economist Ed Leamer’s assertion that we’ve looking to wrong people to rescue us. Wall Street isn’t really improving, and Washington isn’t going to create the growth that the country needs. What we need to fix is Main Street.
Leamer said that the dot-com bubble and the housing bubble disguised a broken educational system that isn’t preparing workers for good, 21st-century jobs. In California, we’ve seen this from two sides. In Silicon Valley, the high-tech sector is recovering nicely. But inland California continues to suffer under the weight of unemployed construction workers.