Forecast paints optimistic picture of Calif economy

December 7, 2010 7:05:13 AM PST
A new report is painting an optimistic picture of the California economy.

The latest Anderson Forecast from UCLA credits voters with putting the state on a healthier financial footing. November's ballot measure now allows the legislature to pass state budgets with a simple majority. This is expected to make California more attractive to businesses and improve its borrowing costs.

The quarterly UCLA Anderson Forecast indicates the state economy will pick up slightly in 2011. Economic growth is expected at a faster pace than the nation's, in part due to improvement in global trade and the technology sector.

Economists predict that the high-tech sector will start to hire again as overseas consumers demand California products. Leading exports are in the manufacturing sector and include computers, electronics, medical devices and aerospace components.

On the downside, the Anderson report says the housing market will continue to struggle, except for revived demand in coastal communities, where the housing inventory is more limited.

Even though the forecast report expects more than 150,000 new jobs next year, it won't be enough to help the state unemployment rate fall to barely fewer than 11 percent until the end of next year.

Looking ahead to 2012 the report indicates continued, gradual improvement, with California's unemployment dropping to just under 10 percent by the end the fourth quarter. The nation's jobless rate fares a bit better - shrinking to just under nine percent by the end of 2012.

Part of the problem for slow job growth in California and nationwide is the huge numbers of displaced workers in trades like construction. Typically, they'd go into manufacturing work, but the report says increasing automation and outsourcing have eliminated many of those manufacturing jobs.


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