LOS ANGELES — The UCLA Anderson Forecast dedicated part of its June 12 quarterly forecast to prognostications about the current economic cycle and what it holds for the future.
For many economists, the 2008 Great Recession has them re-evaluating the rulebook and common wisdom about U.S. economic cycles.
UCLA Anderson Forecast Director Ed Leamer titled the report he presented Thursday, "Something is Seriously Wrong."
In the report, he takes a look at a number of long-term issues plaguing the U.S. economy and potential reasons why it is growing more slowly today, than it has in past economic cycles.
"Something is seriously wrong -- or maybe just different," Leamer writes.
"The good news is that there are none of the imbalances normally associated with an oncoming recession," he said. "The bad news is that disappointing economic growth going forward will continue to reveal that the U.S. economy faces some very serious issues, the most important of which are a workforce ill-suited to the reality of a post-industrial 21st Century world, and too many elderly and not enough working stiffs."
Despite longer-term concerns, Leamer predicted that real GDP will bounce back from its dismal showing in the first quarter.
"We forecast 3.6% growth in the second quarter, with a 3% economy that gets a little healthier in 2016. Not a recovery, but normal growth," says Leamer.
Forecasters are also anticipating the rate of unemployment will continue to trend downward to 5.4% in 2016, but that inflation will remain dormant, rising above the Federal Reserve's 2% target. The Fed will sit on short-term rates until the first quarter of 2015, which may not affect the real economy, as housing starts edge slowly up to 1.5 million in 2016, according to Leamer's report.
Leamer also diagrammed longer-term economic issues that might be acting as a drag on a more robust economic recovery.
He noted in his report that none of the last three recessions has been followed by a real recovery; and that permanent displacement of jobs in both manufacturing and construction sectors are having an impact.
