The quarterly UCLA Anderson Forecast released Wednesday predicts any national economic recession in coming months will have a “milder” impact on California.
“There are economic forces that will lead the state to a more moderate outcome. These include construction, non-information technology and the defense buildup,” the UCLA economists said.
The forecasters said the national economy could go either way — slower but continued growth or a “relatively mild, short-lived recession” — depending on inflation and actions by the Federal Reserve to contain it.
If the economy does not go into a recession in 2023, economic growth is expected to slow in the first quarter of 2024 and to be virtually nonexistent in the second quarter, then pick up in 2023’s last half.
If there is a recession, the economy is expected to contract at a 2% to 3% annual rate in both the second and third quarters, to be flat the last three months of the year, and then begin to rebound in 2024.
But the economists noted that “despite dire predictions by some business leaders, the national economy has proved resilient as consumers continue to spend and businesses continue to invest.”
In any event, California is likely to be spared the worst of any recession thanks to recent job growth in new employment sectors.
“With growth in greentech, medtech, aerospace tech and construction employment fueled by the infrastructure and defense budgets and a healthy rainy-day fund in Sacramento, the 2023 forecast for California is for … faster growth — or, in the case of recession, a milder downturn than for the U.S.,” according to the forecast.
The UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was the first to call the recession caused by the COVID-19 pandemic.