UCLA Forecast Shows Growth, Housing Leads Way
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LOS ANGELES-In its fourth and final quarterly report of 2012, the UCLA Anderson Forecast’s outlook for the US says that GDP will grow at less than a 2% annual rate through mid- 2013. After that, the forecast expects growth to pick up and exceed 3% for most of 2014 with housing activity leading the way.
According to the forecast, unemployment will stay close to the current 7.9% rate in 2013, but gradually decline to 7.2% by the end of 2014. By the end of the forecast period, inflation is expected to be above the Fed’s 2% target, bringing to an end the zero interest rate policy that has been in place since late 2008.
In California, though the passage of Proposition 30 by California voters creates some risk and has some impact on the forecast, the outlook for 2013 and 2014 still shows a growth rate that exceeds the nation’s rate.
On the positive side, UCLA Anderson Forecast senior economist Jerry Nickelsburg, says that Prop 30 provides a way forward in funding state investment in education and providing at least some funding for the re-alignment of services. On the negative side, he says, “it does not address the issues of the way in which Californians fund state government for the long-run, which could make things worse rather than better.”
There is no question that this is a complicated issue, he says. “For example, higher income taxes may reduce the demand for living in California as individuals follow incentives to other locales. If that were the case then the appreciation rate of housing would decline (less demand = lower prices) and part of the increase in taxes would be borne by homeowners in a decrease in the value of their assets. This will impact property tax revenue as well.”
Our forecast for 2013 is for employment growth of 1.3% and for 2014 it is 2.4%, says Nickelsburg. “Payrolls will grow at 1.4% and 2.2% for the two forecast years. Real personal income growth is forecast to be 1.8% in 2013 followed by 3.1% in 2014. Unemployment will fall through 2013 and will average approximately 9.7% for the year. In 2014 we expect the unemployment rate to drop to 8.4% on average, a percent higher than our US forecast.”
Check back with GlobeSt.com for some more specific points from the UCLA Anderson Report.
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