September 15, 2010

UCLA Anderson Forecasts Predicts High Unemployment and Low Economic growth until 2012

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In its third quarterly report of 2010, the UCLA Anderson Forecast predicts "very sluggish growth" for the foreseeable future as the U.S. economy continues to recover from the recession. As for the California economy, the state is looking at a difficult period ahead as it attempts to regenerate not only the 1.3 million jobs lost during the recession but also create additional jobs needed for new entrants into the job market over the past two-and-a-half years.

In a report titled "The Uncertain Economy," UCLA Anderson Forecast senior economist David Shulman offers two explanations for the ailing national economy.
* balance-sheet hypothesis - recoveries from the bursting of debt-fueled financial bubbles are invariably slow and are associated with high unemployment rates and rising government debt
* Policy uncertainty - businesses are unsure of the implications of their investments — whether new hires or new computers — given the uncertainty surrounding tax, environmental, energy, financial, labor and health care policies.

The Forecast predicts the national unemployment rate will be 9.7 percent by year's end and 9.5 percent in 2011. 3% GDP growth could return in 2012 for the USA. The California unemployment rate — currently at its high point of 12.6 percent — is expected to fall slowly through the balance of 2010 and average 12.2 percent for the year. The California unemployment rate won't fall below double digits until 2012.

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