Forecasters at UCLA’s Anderson School see slow, sluggish growth and high unemployment as the U.S. economy recovers from a recession.
For about a year, the buzzword among the UCLA economists has been “balance-sheet recession.” People and businesses have applied self-discipline to fix their “balance sheets.” Consumers are doing the same by saving money and paying down debt.
"Although it’s perfectly right for the individual consumer, it’s not great for the economy," says forecaster David Shulman. Shulman says businesses are hesitant to hire lots of people, and he knows exactly why.
"Just take a look at the amount of uncertainty coming out of Washington," says Shulman. "It is very, very hard to plan if you don’t know what your tax rate is, you don’t know what health insurance is gonna be, you don’t know what energy is going to be. And you really don’t know how all this financial regulation is going to play out." So, Shulman says, the nationwide unemployment rate will hover above 9.5 percent for another year.
Even though they’re not hiring, he says, businesses are starting to buy new equipment. "You don’t have to pay a health insurance premium for a computer."
The Anderson forecast indicates that in California, the unemployment rate is peaking now at just above 12.5 percent, but it won’t fall below 10 percent for another two years. Despite that, senior economist Jerry Nickelsburg maintains that the Golden State’s economy is growing."In many ways, it doesn’t feel like it’s growing."
But really, it is, thanks to international trade that’s got the state’s seaports and airports humming again. "And so we’re seeing increased employment in trucking and warehousing and logistics, many of the terminals at Port of Los Angeles, and Port of Long Beach have announced they’re gonna add another shift."
On the same day as the quarterly forecast, good news arrived for the Southland’s economy. Korean automaker Hyundai announced plans to double the size of its North American headquarters building in Fountain Valley – and to double the number of employees there to 1,400.