The U.S. economy is returning to normalcy, according to the latest UCLA Anderson Forecast’s outlook.
Despite the economy not being “normal relative to historical standards”, the group predicts growth of 2.5% for the rest of 2013 before increasing to the “normal” historical growth rate of 3% in 2014 and 2015.
The UCLA Anderson Forecast predicts employment growth of 2.7% this year, followed by 2.1% for 2014 and 2015.
UCLA Anderson Forecast Senior Economist David Shulman said that although the economy seems to be on the right track for economic recovery, the country is still performing well below what was expected before the recent recession.
In fact, the latest COUNTRY Financial Security Index® survey, revealed that most Americans feel that their financial security has not improved, despite economic recovery beginning around mid-2009.
David Schulman pointed out that the current median household income is still lower than it was in June 2009. In his report, titled “Returning to Normalcy, Sort of”, Schulman stated that by the end of the forecast period the unemployment rate will slowly decline to 6.5% by the end of 2015.
The implementation of the Affordable Care Act may not help the quantity of net increases in employment, especially as big firms take on more part-time workers as opposed to full time and small businesses will try and limit their workforce to a maximum of 50 full-time workers.
Under the Affordable Care Act employers with over 50 full-time employees are obligated to offer group insurance plans including “essential benefits.
These plans are not allowed to cost the worker more than a certain percentage of their adjusted gross income. If not, the business owner risks being penalized – up to $2,000 or $3,000 per employee. However, small businesses with less than 50 full time workers are exempt from the ACA mandate of having to offer a group insurance plan.
The current low mortgage rates and rising household formations makes the housing market attractive to buyers. The group forecasts that housing starts rose will increase to 965,000 units this year, from 783,000 in 2012.
Since the end of the recession there has been a 2% growth rate in the economy. The researchers predict that growth will eventually return to a normal rate of 3% within the next couple of years. In addition, the UCLA Anderson Forecast predicts an end to low interest rates.
California’s economic outlook
Senior Economist Jerry Nickelsburg analyzed the economic recovery in California.
The economic recovery in California is quite good compared to the rest of the country. However, the recovery is not occurring at an “equal” rate. In fact, the recovery is very much divided into skill class and geographic region.
Nickelsburg wrote in his article, “Where are the Jobs, California”, that investment and tech driven economies in the state have performed much better than inland economies which are mainly driven by construction.
Bay Area, Orange County, San Diego and Ventura have seen very healthy growth – at a faster rate than the U.S. However, Sacramento Delta, San Joaquin Valley and Inland Empire are falling right behind.
The data comes from the UCLA Anderson Forecast, which is among the most watched and cited economic outlooks for the U.S. and the state of California.