Anderson Forecast calls domestic economy "bipolar"

Americans are producing more, but job growth is very sluggish. So UCLA’s Anderson Forecast has pronounced the domestic economy “bipolar.”

The forecast says economic output is on the rise. The surge in productivity started when companies felt the pinch of the recession.

"Firms decided to lay off lots of people, and then they figured out that they could produce as much as before with less people," Senior Economist David Shulman says.

The Gross Domestic Product was up almost 6 percent at the end of last year, but the economy still lost jobs. Shulman expects those jobs to begin return very slowly this year. That would lower the unemployment rate only slightly to just over 9.5 percent. He says that businesses are reluctant to start hiring, uncertain about a range of changing government policies, from health care reform to interest rates.

"We don’t really know when taxes are going to go up a lot or spending is going to go down a lot, and that affects business decision making," Shulman says.

In California, the unemployment rate stands at 12-and-a-half percent. The UCLA Anderson economists predict that it won’t dip into the single digits for another couple of years. The state budget crisis will play a role in the sluggish job growth, pressuring the state and local government to lay off even more workers. But if you think the Golden State's budget crisis is bad, Shulman says it's far from the worst.

"Things are far worse in New Jersey, far worse in Illinois, far worse in Nevada, Arizona," Shulman says. "California may be the first, but it's not the worst."

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