A recent report released by UCLA Anderson School of Management called the UCLA Anderson Forecast has predicted that California’s economy will continue to grow at a steady rate as employment increases over the next couple of years.
Increases in Personal Income and Employment
According to the report, California residents can expect to see an increase in real personal income. This year, the increase is projected to be 3.1 percent, while 2017 should see a 3.4 percent increase and 2018 will see a 3 percent increase. At the same time, total employment growth is expected to be 2 percent this year while experiencing a slight slowdown in 2017 of 1.6 percent and an even greater slowdown in 2018 of 0.8 percent. Overall, the state’s unemployment rate is expected to reach the national rate of 5.1 percent by 2018 due to the fact that employment has grown steadily and is now reaching record levels.
Some industries within the state have experienced more growth than others. Payroll jobs, for example, are at 16.4 million within the state, which is 6 percent more than the previous peak. Those employed in farm labor or who are self-employed reached a total of 18.1 million jobs, representing a 6.2 percent increase when compared to the previous peak. With the state’s population having grown by 9.5 percent since 2007, however, it is still not quite reaching the full employment level. Furthermore, the state continues to be divided in terms of the types of jobs that are available in certain areas. The inland parts of the state primarily focus on manufacturing, agriculture and government, all industries that continue to suffer. Meanwhile, the coastal industries of information, technology and trade have all led the recovery.
Unfortunately, the report also found that Los Angeles has the lowest home ownership among the country’s 40 largest metro areas while also having the largest share of lower class residents and a smaller share of middle class residents.
According to the same UCLA Anderson Forecast, the country is likely to see continued slow but steady growth of the GDP of about 2 percent. More specifically, the report predicts 1.7 percent real GDP growth in 2016, 2.8 percent in 2017 and 2.1 percent in 2018 for an average of 2.2 percent. For the fourth quarter of 2016, the report predicts a 2.7 percent growth rate.
National economic growth will be mostly driven by increases in consumer spending and housing. Meanwhile, the labor market is expected to average about 200,000 increases in payrolls per month with a steady unemployment rate of about 5 percent with 2.7 million new jobs predicted for this year and 2.1 million predicted for next year. With things expected to continue to hold steady, the report also predicts an increase in interest rates to help keep real rates of interest constant.
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(all data current as of 5/25/2017)
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