Weak jobs outlook

The latest UCLA Anderson Forecast shows double-digit unemployment in the state (and by extension L.A. County) through at least the end of next year and perhaps well into 2011. The report also points out that the June employment numbers could be especially bad because there's been so little hiring of high school and college students who are just graduating. So instead of five percent unemployment when the economy is relatively normal, you're looking at 11 or 12 percent.

But isn't the recession expected to end in just a few months? Well yeah, at least according to some economists, but that only means the economy will have stopped going down - it doesn't take into account the degree to which it will start going up. The number of new jobs that will be generated in the next year or so won't be nearly enough to accommodate all the jobs that were lost in the recession, especially in areas like construction, manufacturing and international trade - three very important parts of the local economy.

The big concern continues to be a reluctance on the part of American consumers to spend at anywhere near the levels they were spending a few years ago. That's because if you still have a job you're probably worried about whether it will last and so you'll keep a lid on spending. If you don't have a job you're not in a position to spend much on anything. We've had long periods of high unemployment in the past (most recently 1991-1995) and it's very debilitating. People start leaving the state, there's more pressure on government service programs, and revenues from taxable sales are subpar. Here's the UCLA outlook for California:

Overall, our outlook for California is for a very weak first 2 quarters of 2009 and very little growth in the 3rd and 4th. The economy will begin to pick up in 2010, and by the beginning of 2011, will be growing at more normal levels. The keys to California's recovery are the recovery in U.S. consumption improving the demand for imports from Asia and the demand for products from California's factories, the resumption of non-residential, public works and multi-family residential construction growth, and the return of growth to the retail sector. Manufacturing will continue the slow bleed of jobs through the 3rd quarter of 2010 primarily due to productivity improvements and leisure and hospitality will remain weak as households increase their consumption in a measured way.

Coverage of the UCLA report from the LAT and OC Register.