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California is in trouble, more forecasters say

September 27, 2010 | 12:56 pm

California's recovery will be weak and slow, according to a forecast released Monday by the California Lutheran University Center for Research and Forecasting, affirming the pessimistic views of other projections about the state's economy.

According to the forecast:

The state's real estate, banking and financial sectors are dragging down any economic recovery. Growth rates will remain meager: The state's economy will expand at a rate of 0.2% in the fourth quarter of this year, much slower than the 1.5% rate nationwide. As the U.S. economy starts to regain strength, growing at rates of 2.1% and 2.4% in the first and second quarters of 2011, California's economy will grow at rates of just 1.2% and 1.8%.

The state's unemployment rate will remain in double digits for the next two years, reaching 10.1% by the end of 2012.

The sluggish construction industry will inhibit economic expansion. New home building permits will remain low through 2012, rising to 11,000 in the second quarter of 2011 but shrinking to 8,800 in the fourth quarter of 2011 and 9,500 in the first quarter of 2012. That's down from 33,000 in the first quarter of 2007. (Note: these numbers have been corrected from the original post.)

Commercial building, which is even harder hit than residential, will remain sleepy. Values of new commercial building permits will stay in the $200-million to $300-million range each quarter until 2012. That's down from nearly $1.2 billion in the second quarter of 2008.

-- Alana Semuels

Photo: Vacant commercial lots like this one in Newark, near Fremont, will slow the state's recovery. Credit: Alana Semuels / Los Angeles Times