June 04, 2015

 

City News Service

 

 

 

Continued improvement in the national construction and automobile industries, along with rising consumer demand, will translate into lower unemployment in California over the next 18 months, according to a UCLA economic forecast released this week. The UCLA Anderson Forecast says California will see employment growth of 2.5 percent this year, 2.1 percent next year and 1.3 percent in 2017.

 

“We expect California’s unemployment rate to be insignificantly different from the U.S. rate at 4.9 percent during the forecast period and employment growth to then be constrained by the growth in the U.S., immigration and natural growth in the working-age population,” senior economist Jerry Nickelsburg wrote in his California economic forecast.

 

He said the state’s unemployment rate will hover around 6.2 percent for the rest of the year then fall through next year, averaging about 5.2 percent. By 2017, the California unemployment rate will be around 5 percent, roughly the same as the national figure, according to Nickelsburg.

 

Nickelsburg notes in the report that ongoing economic expansion has led to a spike in long-term unemployment.

 

“This roughly corresponds to the decline in manufacturing, the  shrinkage of a construction sector bloated by the housing bubble, and the changes in the finance, legal and professional services sector,” he wrote.

 

He noted that the younger set of long-term unemployed still have potential to “move their skill sets into expanding sectors,” but people who are late in their careers “do not have too many potential years left to recoup the cost of obtaining new or enhanced skills and therefore their incentives are much lower.”

 

But Nickelsburg states in the report that California job creation “continues to be widespread.”

 

“In the 12 months ending April 2015, the top sectors in job creation were health care and social services, leisure and hospitality, administrative services, professional technical and scientific services, construction, retail and wholesale trade,” he wrote.

 

On the national front, senior economist David Schulman wrote in his analysis that despite a “weather-induced” bump in the road during the first quarter, the U.S. economy remains on track for 3 percent growth in the GDP by the third quarter, with the pace continuing through next year.

 

“In this environment, the unemployment rate will drop below 5 percent, inflation will move above 2 percent and the Fed will embark on a gradual tightening process starting this September,” Schulman wrote.

 

He said the money that has been saved by consumers by the drop in gas prices has not trickled into the retail market.

 

“Simply put, instead of spending, it appears that cash-strapped consumers are paying down debt and increasing their savings,” Schulman wrote.

Category: Business



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