California's economy is now "running on fumes" and will likely be sputtering well into next year, according to the latest quarterly UCLA Anderson Forecast.

The forecast, released Wednesday, notes that the recession now appears to be longer and deeper than it was just three months ago, with a 2.6 percent drop in employment expected this year and a statewide unemployment rate nearing 12 percent.

The job losses will be accompanied by a nearly 1 percent decline in personal income and a 4 percent drop in taxable sales, putting more pressure on state and local government budgets.

"We thought our forecast for California in December was somewhat pessimistic. What we did not realize was how fast things would deteriorate," forecast author and senior economist Jerry Nickelsburg said in the report. "The diverse engines of California's economy find themselves running on fumes," he said.

Nickelsburg said the state's economy is unlikely to begin to recover until next year and normal growth will not resume until the end of 2010. The recovery will depend on whether the federal stimulus plan and the bailout strategy work as intended and global trade begins to pick up next year. Failing that, the recovery could come even later, according to the forecast.

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