California’s economy will not resume normal growth until next year, according to the UCLA Anderson Forecast of the state’s economy.
The state’s jobless rate will remain stubbornly high this year, averaging 11.8%, according to the forecast. The jobless rate will fall to 10.4% for 2011 and 9.7% for 2012. Personal incomes will rise 1.3% this year and 3.7% next year.
“Slow growth is expected in 2010 as government and construction continue to restructure and a reticent consumer nationwide does not boost imports to levels which would revitalize the logistics industry,” said senior economist Jerry Nickelsburg in a report.
He forecast job losses in most major private-sector industries this year, including a 5.5% drop in construction and 2.9% decline in manufacturing. California should see across the board job growth next year with the exception of the government sector, he said. The job gains will be led by construction, professional and business services and trade warehousing and utilities.
The lack of private-sector job growth this year is being exacerbated by cuts in public employment across the state, as municipalities seek to balance their budgets to match declining revenues.
Local governments cut 30,000 jobs in 2008 and 17,000 in 2009 for a total reduction of about 3%. The state government has cut a more moderate 1.5% of payrolls. Overall state and local government employment is forecast to fall 2.7% this year and 2% next year.
“We are still expecting job growth, we are still seeing signs of turning the corner, and the data are not so strong as to convince us that we have indeed turned the corner,” Nickelsburg said.
Real taxable sales, which determine the amount of local sales tax collections, will decline 0.4% in 2010 before rising 3.6% in 2011 and 4.9% in 2012, according to the Anderson Forecast.
