Recession fears are real in California and nation in 2020, key economic report says

California’s uncertain economy is perhaps a little stronger than many think heading into 2020, but a recession may well be looming ahead, key economists say in a new report.

Authors of the UCLA Anderson Report put it this way: The state economy is slowing, but it is slowing less than analyses indicated three months ago. And, California appears to be doing better economically that the nation as a whole, which is seeing a slightly more noticeable economic slowdown heading into 2020.

It’s the second major report this week that warns of a possible recession, but suggests California has the wherewithal to weather it. The Public Policy Institute of California in a Tuesday report said the state economy looks bright at the moment, but officials could be prepared to do battle with a downturn by strengthening “safety net” programs.

The quarterly UCLA report, put out by the university’s Anderson School of Management on Wednesday, projects a modest 1.7 percent national economic growth, rosier than the 1 percent forecast three months ago. That’s due to expected improvement in housing and employment growth.

“Since national economic growth is slowing at a slower rate than the forecast three months ago, the California forecast is now slightly stronger than predicted last September,” UCLA Anderson Forecast Director Jerry Nickelsburg wrote.

But the UCLA economists offer a less than cheery view of the second half of next year. Senior economist David Shulman writes: “Make no mistake, although we have lowered the risk of a recession, the second half of 2020 remains problematic for the economy.”

UCLA Anderson Forecast director emeritus Professor Edward Leamer wrote that “everyone should” be on the lookout for a downturn, because it will hit home.

“Some of your family members may lose their jobs; debt service may be difficult; you might lose your home,” he wrote. “Even if your revenue flows are not threatened, the value of all your assets is. A recession is a time that is hard on leverage but great for those with cash to acquire new assets.”

There has been good news in the last financial quarter, the UCLA researchers say: stock prices have reached “decisive highs,” the Federal Reserve cut interest rates, and housing activity, though modest, has exceeded expectations. Employment growth in October was better than expected, and there is some recent hope of an interim trade deal with China.