California continues to lead a nationwide economy that is growing slowly, but that growth is too slow to be considered a real recovery. That’s the latest assessment Wednesday in the UCLA Anderson Forecast.
Recessions like the one the U.S. economy is currently trying to recover from are usually followed by a period of high growth. But Ed Leamer, Director of the UCLA Anderson Forecast, asks "Where is the Great Recovery?”
Leamer writes that in normal times, gross domestic product (GDP)– or the country’s total economic output – grows at about 3 percent. During the first three months of 2013, GDP grew at a rate of 2.4 percent.
"It’s not a recovery. It’s not even normal growth,” Leamer writes. "It’s bad.”
The forecast predicts GDP will edge up to a 3 percent growth rate in 2015. That same year, the report predicts, nationwide unemployment rate will drop to 6.6 percent, but that will be due in part to growing numbers of discouraged workers.
The UCLA Anderson Forecast shows the U.S. housing market is in the early stages of a real recovery. One Anderson economist writes that home prices are rising and housing starts are in the process of nearly tripling, from a historically low 550,000 in 2009 to 1.5 million by 2015. But Anderson Senior Economist David Shulman said the 50-year average for housing starts is 1.47 million.
"So we’re just going a touch above that very long-term average,” Shulman told KPCC. "This is not a very heroic forecast.”
The housing market’s recovery is part of what’s making California "a bright spot” in the U.S. employment picture, according to Anderson economist Jerry Nickelsburg.
"As job gains accumulate, household formation rates increase and the demand for housing, finally, is generating new residential construction," Nickelsburg said.
Nickelsburg expects California’s unemployment rate to average 9.1 percent this year fall to 8.1 percent next year, then to 7.1 percent in 2015.
California's unemployment rate dropped from 9.4 percent to 9 percent in April, the U.S. Bureau of Labor Statistics reported in May. The report showed nationwide, employers added 165,000 jobs in April and the unemployment rate fell to a four-year low of 7.5 percent.