California’s unemployment rate continues to trend downward, putting the state close to full employment, but uncertainties on the national political front are raising questions about future prosperity, according to a UCLA Anderson Forecast economic outlook released Tuesday.
In his California report, UCLA Anderson Senior Economist Jerry Nickelsburg wrote that the state’s unemployment rate will likely continue to drop slightly, from the 4.8 percent rate in April down to about 4.5 percent by 2019, about 0.4 percent above the national rate.
“The current forecast is slightly lower … than our previous one,” Nickelsburg wrote. “This reflects the difficulties that the Trump administration is having in getting its stimulus packages passed. For example, the increase in the size of the Navy through the addition of a large number of ships, a purchase which would have benefited San Diego, did not even appear in the budget proposal.
In addition, deportations, or the threat thereof, of unskilled workers will impact food harvesting and food processing,” he wrote.
He predicted total employment growth of 1.4 percent, 1 percent and 0.9 percent over the next three years, with payrolls growing at about the same rate. Personal income is expected to grow in the 3 percent range during the period.
On the national front, UCLA Anderson Forecast Director Edward Leamer predicted growth in gross domestic product to be a “steady and disappointing” 2 percent despite White House anticipation of 3 percent. Leamer said such optimism has hurdles to overcome.
“To make America great again we have to solve three problems — how to increase the rate of growth of the working age population, how to increase the rate of growth of hours by making more of the new jobs full-time not part time and how to increase the rate of growth of productivity.
“Can we make the rate of growth of America’s productivity great again? There are hopes but little evidence.”
Leamer said presidential calls for lower tax rates and less regulation are premised on the hope that they will jump-start businesses and production.
“The hope is also that increased investment in infrastructure will help too,” Leamer wrote. “The alternative view is that we are in an entirely different technological age which is not capable of producing high rates of productivity growth any more. Time will tell. In the meantime, the safe thing is to plan on only 2 percent growth.”
— City News Service
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