December 10, 2020
The latest UCLA Anderson Forecast anticipates positive economic news is on the horizon, a rosy prediction that’s based on the assumption that mass vaccinations would clear a path toward a new, productive normalcy for many industries. UCLA economists unveiled their optimistic quarterly forecast for the U.S. economy on Wednesday and it is one that envisions a “rough winter” ahead, as economic growth remains stalled by measures intended to prevent rising spread of virus cases until vaccines become widely available.
But the December forecast also offers hope of a robust recovery from the current recession. The latest national report, authored by senior economist Leo Feler, anticipates two more quarters of slow growth — seasonally adjusted annual rates of 1.2% for the fourth quarter of 2020 and 1.8% for the first quarter of 2021 — before robust growth of 6% in the second quarter of 2021.
After that, national growth rates should remain above 3.0% well into 2023. “We expect the economy will reach its previous peak by the end of 2021,” Feler writes.
The UCLA forecast predicts California’s economic recovery is expected to mirror the national rebound. Though the COVID-19 pandemic’s outsized and unpredictable impact on California is expected to continue, at the very least, for the immediate future.
Forecast director Jerry Nickelsburg and economist Leila Bengali assume that an elevated number of virus cases will persist in California, and that caution will prevail regarding many traditional holiday activities, including in-store shopping, throughout the winter.
They wrote in the report, “This will mean a weak growth rate through the balance of the year and into early 2021. For the purposes of our forecast, we also assume that a large number of people will have received one of the vaccines by summer, ushering in the beginning of a return to normalcy.”
The report notes that 1.37 million non-farm payroll jobs in California have been lost since October 2019, although there has been a recovery of some of those jobs since April 2020. Heavy job losses incurred in a handful of sectors this year will remain the state’s weakest economic sectors, including leisure and hospitality, retail and education. The forecast for the Golden State is that the technology sectors, residential construction and logistics will lead the recovery, and that post-pandemic California will grow faster than the U.S. as a whole, although the state’s recovery is expected to begin later.
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