UCLA Anderson Forecast: National and Statewide Outlooks Anticipate
Modest Growth in GDP, Housing and Employment Next Year
LOS ANGELES, Dec. 5, 2012 /PRNewswire/ -- In its fourth and
final quarterly report of 2012, the UCLA Anderson Forecast's
outlook for the United States says
that Gross Domestic Product (GDP) will grow at less than a 2%
annual rate through mid- 2013. After that, the forecast expects
growth to pick up and exceed 3% for most of 2014 with housing
activity leading the way. Unemployment will stay close to the
current 7.9% rate in 2013, but gradually decline to 7.2% by the end
of 2014. By the end of the forecast period, inflation is expected
to be above the Fed's 2% target, bringing to an end the zero
interest rate policy that has been in place since late 2008.
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In California, though the
passage of Proposition 30 by California voters creates some risk and has
some impact on the forecast, the outlook for 2013 and 2014 is not
much different than the previously released September forecast,
with numbers marginally lowered for 2013 and 2014 still seen as a
year that California's
growth rate exceeds the nation's.
The National Forecast
In the December Forecast report, UCLA Anderson Forecast Senior
Economist David Shulman looks beyond
the "fiscal cliff" (a colloquial expression describing the
expiration of previously enacted tax cuts combined with some
automatic spending cuts totaling about $600
billion – about 4% of the economy –scheduled to take effect
in January 2013) and assumes that the
executive and legislative branches of government will reach an
agreement before the year's end. If they don't, "… according to the
Congressional Budget Office, the economy will fall back into
recession with unemployment returning to 9% late next year,"
Shulman writes.
Even if a compromise is reached, considering the recent upward
revision to the third quarter GDP data, "the near-term outlook for
the U.S. economy continues to be characterized by modest growth,"
Shulman writes. "Specifically, we are forecasting that real GDP
will increase at an annual rate of only 0.7% in the current quarter
and less than 2% growth in 2013's first half."
The California Forecast
The California report, authored
by UCLA Anderson Forecast Senior Economist Jerry Nickelsburg, examines the economic
consequences of Proposition 30, which Nickelsburg refers to as "the
most important change in the Golden State since the September UCLA
Anderson Forecast release." On the positive side, writes
Nickelsburg, Proposition 30 provides a way forward in funding state
investment in education and providing at least some funding for the
re-alignment of services. On the negative side, it does not address
the issues of the way in which Californians fund state government
for the long-run, which could make things worse rather than
better.
Employment is expected to grow 1.3% in 2013 and 2.4% in 2014.
Payrolls will grow at 1.4% and 2.2% in the respective forecast
years. Real personal income growth is forecast to be 1.8% in 2013
followed by 3.1% in 2014. Unemployment will fall through 2013 and
will average approximately 9.7% for the year. In 2014 it is
expected that the unemployment rate will drop to 8.4% on average, a
percent higher than the U.S. forecast.
Additional Reports
In addition to the forecast reports, the UCLA Anderson research
center released a pair of essays by Economist William Yu. One presents a picture of the high
variability of credit risk among California municipalities, a phenomenon rooted
in home value fluctuations and public employee expenditures. The
other is the First -5 LA/UCLA City Human Capital Index (CHCI): 2011
Update, which looks at the education level of human capital in
cities and counties across the nation in 2011. Although LA's CHCI
has improved over the past several years, it still ranks near the
bottom among the 30 largest metro areas.
December Forecast Conference
The December UCLA Anderson Forecast Conference will be held
Wednesday, December 5, 2012. The
conference's special topic is Sovereign Debt and the Fiscal Cliff.
In addition to presentations of the national and California forecasts, speakers and panels will
address the nature of the U.S. fiscal cliff, global debt and
persistent deficits at home and abroad to gain insight into the
trajectory of the U.S. and CA economies. Speakers include
Edward Leamer, Director, UCLA
Anderson Forecast; David Shulman,
Senior Economist, UCLA Anderson Forecast; Jerry Nickelsburg, Senior Economist, UCLA
Anderson Forecast; William Yu,
Economist, UCLA Anderson Forecast; Stephen
Oliner, Senior Economist, UCLA Anderson Forecast &
Senior Fellow, UCLA Ziman Center for Real Estate; Greg Devereaux, CEO, San Bernardino County; Eric Hoffmann, Senior Vice President and Manager
of the California Local Government Ratings Team, Moody's Investors
Service; Miguel Santata, CAO,
City of Los Angeles; and
Sean C. Kraus, Vice President,
Credit Suisse Private Bank USA,
Los Angeles.
About UCLA Anderson Forecast
UCLA Anderson Forecast is
one of the most widely watched and often-cited economic outlooks
for California and the nation and
was unique in predicting both the seriousness of the early-1990s
downturn in California and the
strength of the state's rebound since 1993. More recently, the
Forecast was credited as the first major U.S. economic forecasting
group to declare the recession of 2001. Visit UCLA Anderson
Forecast on the
Web at http://uclaforecast.com.
About UCLA Anderson School of Management
UCLA Anderson
School of Management is among the leading business schools in the
world. UCLA Anderson faculty members are globally renowned for
their teaching excellence and research in advancing management
thinking. Each year, UCLA Anderson provides a distinctive approach
to management education to more than 1,800 students enrolled in its
MBA, Fully-Employed MBA, Executive MBA, Global Executive MBA for
Asia Pacific, Global Executive MBA
for the Americas, Master of Financial Engineering, doctoral and
executive education programs. Combining selective admissions,
varied and innovative learning programs, and a world-wide network
of 37,000 alumni, UCLA Anderson develops and prepares global
leaders. Follow UCLA Anderson on Twitter at
http://twitter.com/UCLAAnderson, or on Facebook at
http://www.facebook.com/uclaanderson.
SOURCE UCLA Anderson School of Management