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UCLA Anderson forecast predicts a slow recovery in California

December 9, 2009 |  8:43 am

Capitol California's unemployment rate will peak at 12.7% this year and then start to subside in 2010, according to a forecast released today by UCLA economists. But the recovery will be slow and painful, not growing at normal levels until mid 2011, and the unemployment rate won't slide below 10% until 2012.

"The stalled California economy is simply not producing the jobs required for the new entrants to the labor force over the next few years," read the UCLA Anderson Forecast.

Consumer demand in Asia and the United States will help drive California's growth, as state exports of manufactured and agricultural goods begin to grow again. That will also rejuvenate the state's sluggish logistics and shipping industries. Stimulus money should also drive employment in high-tech areas such as Los Angeles and the Bay Area.

The economists say that employment will shrink by 4.3% in 2009 and contract an additional 0.7% in 2010 before finally beginning to grow in 2011, albeit at only 1.7%.

One drag on the recovery will be state government, said economist Jerry Nickelsburg. Although cuts to the payrolls had been expected to occur in 2009, they were by and large postponed until the 2011 fiscal year. Those employment cuts will be made just as the state economy is beginning to recover, dragging down that process.

The forecast is in line with a reports released yesterday by Comerica Bank and Chapman University. For more on all three, click here.

-- Alana Semuels

Photo: Further cuts from Sacramento will drag down California's recovery. Credit: Robert Couse-Baker via Flickr.

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