UCLA Forecast: More Growth Ahead

LOS ANGELES-California’s economy should continue to expand at its fastest rate in more than a decade next year, a widely anticipated study says, fueling demand for Southland office and industrial space.

The annual report by the UCLA Anderson School of Business also predicts that the number of nonfarm jobs will grow 2.6% in 2001 even as the nationwide job market starts to cool. The Inland Empire of Riverside and San Bernardino counties will see even stronger 5.2% job growth, as more businesses move eastward to lower their real estate costs.

“This is a truly stellar performance, particularly when you realize that we didn’t grow at all for the first half of the 1990s,” says Rajeev Dhawan, director of econometric modeling at UCLA and author of the survey.

The annual UCLA forecast is one of the most widely anticipated every year, in part because of its depth and track record for accuracy. But while Dhawan says solid job growth in 2001 should keep demand for office and industrial space high, his figures indicate that owners of Southland retail developments might be in for a slowdown.

Though the study says statewide taxable sales should jump 10.9% this year, next year’s growth rate will fall to only 5.6% and then drop to 5.3% in 2002–a reflection of moderating employment gains, rising interest rates and the recent jump in energy prices.