The authors of the report expect US GDP growth to be a moderate 1.8% in the 4th quarter of 2013, and sustained 3% growth (annualized) by Q2 2014.
They also predict that about 200,000 jobs will be added each month next year, bringing the unemployment rate down to approximately 6% by the end of 2015.
California split widens
Economic growth in California is lop-sided, with coastal areas doing much better than inland.
From Marin to San Diego, including parts of Los Angeles County, jobs are being created at a faster pace than the national average, with Silicon Valley seeing payroll employment growing at twice the US rate.
However, the Inland Empire and Sacramento Delta regions are seeing sluggish growth, while the San Joaquin Valley and East Bay areas are either flat or losing jobs faster than they are creating them.
US economic forecast overall
UCLA Anderson Forecast Senior Economist David Shulman writes in the December Forecast report that US economic growth will be driven by strong automobile and housing sectors, together with greater business spending and an end to the dramatic drop in federal purchases, as long as the federal government does no harm.
The authors’ US Economic Forecast for mid-2014 is for 3% growth, and 6% unemployment by the end of 2015.
Policy interest rates are expected to remain low for the whole of next year, but inflation will slightly exceed 2%. Inflation will be pushed up mainly because of rising health care and housing costs.
The zero interest rate policy of the Federal Reserve will probably end during the first or second quarter of 2015.
The California Forecast
Senior Economist Jerry Nickelsburg, author of the California forecast report, says that overall California has just about managed to recover the jobs lost during the Great Recession. After losing 1.065 million jobs (payroll, farm and self-employed), employment through October 2013 rebounded by 1.044 million.
However, only about three-quarters of ‘payroll jobs alone’ have been recovered. “This suggests Californians are creating their own jobs by starting new enterprises at faster rate than established businesses are hiring.”
Most of the new jobs have been created in communities along the coast, while inland unemployment rates continue well above pre-recession levels. Nickelsburg compares the inland regions of California to Appalachia, which went through thirty years (1960-1990) of high unemployment and low-wage jobs.
It is not all bad news inland. Kern County is going through an energy boom, and the UCL at Reverside’s new medical school should start generating higher-education jobs soon, as well as several other health care related positions.
Below are some highlighted data from the California forecast:
- Total employment growth (payroll, farm & self-employed): 2013, 2.4 percent; 2014, 1.5 percent; 2015, 2 percent.
- Non-farm payroll employment growth: 2013, 1.7 percent; 2014, 1.8 percent; 2015, 2.2 percent.
- Real personal income growth: 2013, 0.6 percent; 2014, 3.2 percent; 2015, 3.1 percent.
- Total unemployment rate: 2013, 8.9 percent; 2014, 8,2 percent; 2015, 7.3 percent.