Tuesday, December 7, 2010

UCLA report: California recovery is still far off

Click here: UCLA report: California recovery is still far off - Sacramento Business, Housing Market News | Sacramento Bee

By Dale Kasler
Published: Tuesday, Dec. 7, 2010 - 12:00 am | Page 6B

The California economy will come back strong.

Just not right away.

That's the gist of the UCLA Anderson Forecast, one of the most closely watched economic crystal balls in the state.

The latest quarterly edition of the forecast, to be released today, says unemployment in California won't dip below 10 percent until the fourth quarter of 2012. The statewide unemployment rate as of October was 12.4 percent.

Among the factors holding back stronger economic growth in the near term: the ongoing slump in housing, weakness among overseas trading partners, and the state's budget deficit.

UCLA senior economist Jerry Nickelsburg said in an interview Monday that the recovery in California will be led largely by exporters. That bodes well for the high-tech and manufacturing industries. But two of the state's most troubling sectors could eventually contribute to the recovery, he said.

In the housing market, "we are getting closer to a take-off point," he wrote in his forecast. The coastal markets will rebound a lot more quickly than inland areas, he wrote.

As for the government sector, Nickelsburg said the November election results could bode well for California. First, Gov.-elect Jerry Brown is from the party that controls the Legislature, the Democrats. Second, voters eliminated the two-thirds vote requirement to pass a budget. Third, they struck down initiatives aimed at raising some fees.

In effect, voters have given Democrats in Sacramento a mandate for solving the state's budget problems without raising taxes, Nickelsburg said.

He said chronic uncertainty about California's budget tends to frighten off businesses.

Submitted by Jim Alex

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