Job losses in the public sector will prolong the economic pain in California through 2010 even as a recovery gets under way nationwide, two forecasters predict.
Jeff Michael, a forecaster at the University of the Pacific, said Tuesday that California's recession will be over before the end of the year. But the cutbacks in state and local government, along with the continuing fallout from the mortgage meltdown, will make 2010 feel like another year of recession, Michael said in UOP's latest quarterly forecast.
Similarly, the newest UCLA Anderson Forecast predicts a sluggish recovery because of the weak public sector. UCLA senior economist Jerry Nickelsburg is more optimistic than Michael about the housing market, and says California will outperform the U.S. economy starting in 2011.
Yet both economists say Californians can expect continued high unemployment for a couple more years or so. The unemployment rate is currently 11.9 percent in California and 11.8 percent in greater Sacramento.
In the UCLA forecast, released today, Nickelsburg said statewide unemployment will peak at 12.2 percent later this year and won't go below 10 percent until the second half of 2011.
Michael, director of UOP's Business Forecasting Center, said statewide unemployment will peak at 12.6 percent next spring and remain above 12 percent through all of 2010. "In the initial going, (the recovery) is going to be very weak," Michael said in an interview.
The twin forecasts show the corrosive effect of dwindling tax revenue. Gov. Arnold Schwarzenegger has pledged to eliminate 7,000 state jobs, while thousands of teachers and municipal employees have been laid off. Some 24,000 government jobs at all levels have disappeared in California in the past year.
Nevertheless, Nickelsburg said California's outlook beyond 2010 is bright. As the global economy pulls out of its slumber and international trade rebounds, business will boom again at California's ports and warehouse. In addition, the state will benefit from the emergence of green technology industries, he said in an interview.
Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
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