Business & Economy

Why economists expect California's economy to grow faster than the nation's

“The real driver here is all the development of technology and innovation in the state,
“The real driver here is all the development of technology and innovation in the state," said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast.
Justin Prichard/AP

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Economists from the UCLA Anderson Forecast released a new report Wednesday, predicting a more positive outlook for California's economy than the nation as a whole.

"The bottom line is that if the U.S. continues to grow through 2018 as we are forecasting it will, then California’s GDP ought to grow faster than the U.S.," said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast. “The real driver here is all the development of technology and innovation in the state."

Nickelsburg used the example of when Tesla took over the GM/Toyota factory in Fremont and used modern technology to automate the production line.

"The robots that are now used for tasks such as seat installation, speeds the process of automobile assembly," Nickelsburg writes in the report. "The workers using the robots are now more productive and thus the workers’ productivity has gone up."

The forecast says California will keep steadily adding jobs over the next few years. By the end of 2018, the forecast says our state will have the same low unemployment rate as the rest of the country: 5 percent.

But not all of the forecast was sunny. Anderson also issued a report on the nation's economy and titled their report: "Disturbances in the Force.”

Factors for the bleaker U.S. outlook include Asia’s sputtering economy, and instability in Europe, where the UK might pull out of the European Union in June.

"Although we continue to believe the economy remains on track for moderate growth, we are not as ebullient as prior forecasts," senior economist David Shulman wrote. 

Another potentially negative factor is the U.S. presidential election – which the forecast warns, without naming names, could “cast a pall over the economy.”

"In the U.S. there are two major presidential candidates who want to 'blow up' the global trading system as we have known it since the end of World War II," Shulman writes. "Economists might not know all that much, but trade wars usually do not lead to prosperity, quite to the contrary."