Forecast Sees Recession Through 2009


Editor’s Note:

This story has been updated to correct the forecast’s expectations for non-farm job losses this year and next.

Next year will be an ugly one for the California economy with continued job losses and falling incomes as the nationwide recession deepens, according to the latest quarterly forecast from the UCLA Anderson School of Management.

The Anderson forecast predicts about 184,000 non-farm payroll jobs will be lost in California in 2009, compared with 139,000 this year. About half of those job losses are expected to come from the manufacturing and trade sectors.

Even worse for state coffers, Californian’s personal incomes, which are expected to be flat for 2008, will drop 0.6 percent in 2009, the first negative year since 2002. Taxable sales are projected to fall 3 percent in 2009 on top of a 5 percent drop for 2008.

“We’re in for a very rough ride in 2009,” said Jerry Nickelsburg, senior economist with the Anderson Forecast and author of the California portion of the forecast.

What had been forecast as a relatively mild recession worsened sharply in September as consumers stopped spending. The collapse in consumer spending is quickly replacing the decline in construction spending as the main factor pulling the state’s economy down, Nickelsburg said in the forecast.

He added that the bottom of the current recession is likely to be reached in the third quarter of 2009, with a gradual recovery beginning in the fourth quarter. But it won’t be until late 2010 until the economy regains solid footing and the jobless rate starts heading down, he said.

The UCLA forecast follows a pair of other gloomy statewide forecasts issued this week. Chapman University is less pessimistic, however, forecasting at least 76,000 non-farm payroll jobs being lost in 2009, compared with its number of 87,000 jobs lost this year.

The University of the Pacific in Stockton did not put a number on payroll job losses. But its forecast calls for the state’s unemployment rate to peak at 9.6 percent by the end of 2009 and remain above 9 percent until early 2011. The state’s current unemployment rate stands at 8.2 percent.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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