UCLA Study: California a Major Player in National Economic Growth

By City News Service

California has been a major player in helping the nation's economy grow, with technology and high-tech jobs leading the state's resurgence, and employment and income growth will continue to be strong in the Golden State over the next two years, according to a UCLA economic forecast released Wednesday.

According to UCLA Anderson Forecast senior economist Jerry Nickelsburg, the state's employment growth has consistently been in the top 10 of U.S. states, with only Utah showing bigger gains over the last year.

"The increase in jobs has been widespread, but the strength of the economy finds its roots in California's technology and knowledge-laden sectors,'' Nickelsburg wrote in his forecast for California. "While it is difficult to separate out tech from non-tech jobs using sectoral data, those sectors which use technology and information more heavily account for over half the job growth in the state.''

Nickelsburg noted that a renewed demand for housing has led to a rebound in the construction sector, but only in selected markets, including coastal markets such as Silicon Valley and Orange County. And while demand is rising, contractors across the state say they are struggling to find skilled construction workers to fill jobs, suggesting unemployed workers may have moved out of state, switched to a different profession or transferred to related fields.

That pattern has left employers hunting for workers or looking for ways to change their business models to adjust to the labor market, Nickelsburg wrote.

"The good news is the depression in construction employment, at least for those who either stayed in the sector or were marginally attached to it while doing something else, is over,'' he wrote. "Construction is now a growth sector for California, and given our forecast for continued job gain at rates exceeding the U.S., it should remain so.

"The bad news is that the shortage of skilled labor will lead to contractors investing in labor-saving capital investment. This will invariably increase the skill requirement for the building trades, and the lesser skilled and unskilled will find that as with other sectors in the 21st Century economy, their lack of skills translates into a lack of good job opportunities.''

Overall, the forecast called for total employment growth of 2.6 percent in the state, followed by 2.1 percent in both 2014 and 2015.

Unemployment will drop for the balance of 2013, averaging about 9.1 percent for the year, according to the forecast. Next year, the rate will drop to an average of 8.1 percent.

On the national front, UCLA Anderson Forecast Director Ed Leamer concluded that despite some growth in gross domestic product, the expansion is far below what can be considered an economic "recovery.''

"U.S. real GDP is now 15.4 percent below the normal 3 percent trend,'' he wrote. "To get back to that 3 percent trend, we would need 4 percent growth for 15 years, or 5 percent growth for eight years, or 6 percent growth for five years, not the disappointing twos and threes we have been racking up recently, which are moving us farther from trend, not closer to it. It's not a recovery. It's not even normal growth. It's bad.''

Regardless, Leamer predicted that GDP would edge up to 3 percent growth by 2015.