The domestic economy is in a “long slump” and the unemployment crisis will continue next year. That’s the bad news from the latest UCLA Anderson Forecast released today. But there’s good news, too.
Part of the good news is the UCLA economists aren’t worried about a double-dip recession anymore. That prospect haunted their last forecast in September, but a jump in auto sales and other good indicators have revived their optimism. Senior economist David Shulman says the domestic economy will experience some growth next year.
"It’s slow growth, and maybe we gain next year 100- to 120,000 jobs a month like we’ve been doing, but that doesn’t put a big dent in the unemployment rate," says Shulman. "That’s the problem."
Shulman is skeptical about last month’s labor report that knocked the country’s unemployment rate down to 8.6 percent. He believes it will be back up next month, and will hover around 9 percent all next year.
OK, that doesn’t really sound like good news. So let’s scope out the forecast for California.
"All throughout California, we see economic growth at a faster rate than we see in the U.S. at large," says Anderson forecaster Jerry Nickelsburg. California’s economic recovery, like the country's, stalled over the summer, but in the last few months, it’s added jobs — everywhere.
Normally, Nickelsburg highlights a geographic split in the Golden State’s economy. Coastal California, technology-driven, knowledge-driven, exports-driven, services-driven, has been growing, while inland California, driven by migration, increases in government employment and construction, has been contracting.
"Now it seems we’ve got growth everywhere, says Nickelsburg. "So that’s good news."
See? Good news. But Nickelsburg says it may be temporary, because the government and construction sectors are still shrinking. He says the expanding sectors are health care, education and durable goods manufacturing. But not old-style manufacturing.
"That’s not riveting and metal bending," says Nickelsburg. "It’s advanced manufacturing, so it requires computer skills and training on robotics and the like."
Nickelsburg says long-term unemployment continues to drag on the economy, because the people out of work don’t have the skills to fill existing jobs. Long-term unemployed Americans can learn new skills or start their own businesses. But the forecaster acknowledges that neither solution is simple or fast.