An apartment building under construction in downtown San Diego. Forecasters predict homebuilding will bounce back quicker, post-pandemic. Courtesy San Diego Housing Commission

The state’s economic future remains in flux due to the pandemic, but its ultimate recovery should be on pace with the rest of the country, according to a UCLA forecast released this week.

Businesses face renewed pressure due to new health orders put in place as the number of infections has sharply increased.

“Although the timing may be offset with California beginning a significant recovery later than some other states, we expect the California recovery to ultimately look very much like the U.S.,” UCLA Anderson Forecast director Jerry Nickelsburg and economist Leila Bengali wrote in their report.

They warned though that key sectors such as leisure and retail will experience slower recoveries “due to the disproportionate reliance on international tourism.”

They predict a resurgence in transportation and warehousing to be mixed “due to the shift to online shopping on the one hand and the expected continuation of the trade war with China in a Biden administration on the other.”

The forecasters added though that California is in a better position in business, scientific and technical services and in the information sector “due to the demand for new technologies for the new way we are working and socializing.”

Residential construction should also aid the recovery “as California’s shortage of housing relative to demand drives new developments.”

Other market conditions, such as low interest rates, they wrote, “leads to a forecast of a relatively rapid return of homebuilding.”

The forecast calls for 123,000 net new housing units in 2021, rising to 132,000 by 2032.

The forecast predicts an 8.9% unemployment rate for the fourth quarter, with the rate dropping to 6.9% next year, 5.2% in 2022 and 4.4% in 2023.

It also predicts a 6.1% jump in employment growth next year, with the rate dipping to 3.4% and 2.2% in the ensuing two years, as the state progressively recovers from the pandemic and its accompanying job impacts.

Much of the forecast, however, is predicated on the expectation that a significant portion of the population will receive COVID-19 vaccinations by summer.

“What we do know is that the pandemic is raging across the country once again,” the report said. “California has responded, as before, with more restrictive non-pharmaceutical interventions via mask mandates, closures and gathering restrictions. We expect that to continue, particularly through the holiday season as significant traveling by Americans has thus far presaged further increases in COVID cases.

“We also know that at least three vaccines are in the latter stages of testing and approval. Does this mean that we are out of the woods soon? The answer is maybe.”

– City News Service

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