Forecast: California will recover from pandemic faster than the U.S.

The U.S. and California economies will experience nearrecord growth this year thanks to widespread vaccinations for COVID-19 and massive federal relief for struggling workers and businesses, UCLA forecasters predict.

“A waning pandemic combined with fiscal relief means a strong year of growth in 2021 — one of the strongest years of growth in the last 60 years — followed by sustained higher growth rates in 2022 and 2023,” according to the quarterly economic outlook released Wednesday.

California, buoyed by highearning technology and professional sectors that shifted to athome work during the pandemic, will recover somewhat faster than the U.S., even though a full rebound in the tourist-dependent leisure and hospitality businesses will lag.

“This is a very ‘good news’ forecast,” said Leo Feler, senior economist of the forecasting group based at UCLA’s Anderson School of Management. “We have finally turned the corner.”

In early December, the forecast had predicted “the ‘20s will be roaring” after the COVID-19 pandemic caused the sharpest decline in economic growth in more than half a century. Now “the roar is definitely getting louder,” Feler said, estimating that gross domestic product, which shrank by a devastating 3.5% in 2020, will grow 6.3% this year, 4.6% in 2022 and 2.7% in 2023.

The growth is far faster than it was after the 2009 recession. But payrolls won’t fully recover in the near future, according to the forecast, given the severity of the downturn and the exodus of many workers from the labor force.

“Following a euphoric resumption of social activity, our economy will stabilize to a different post-pandemic baseline than would have been the case had the pandemic never occurred,” the economists wrote.

The U.S. is still down 9.2 million jobs after losing 22 million jobs in March and April of last year, Feler said. By the end of 2023, the nation will be short 5 million jobs from “where we would have been without the pandemic,” he added.

“There are people who aren’t going to come back in the labor market, who were close to retirement, lost jobs, and are going to have a hard time getting rehired.”

President Biden is expected to sign a $1.9-trillion economic relief package this week, targeting benefits to lower-wage earners, expanding loans for small businesses and sending millions of dollars to state and local governments to reopen schools and boost vaccinations.

About 32 million Americans have been fully vaccinated and 61 million have received at least one dose, although the risk of another virus surge due to dangerous variants or relaxed safety precautions remains.

California has suffered a higher unemployment rate than the nation in part because of stringent pandemic restrictions that shut businesses and schools. In the last quarter of 2020, the state’s jobless rate was 8.4% compared with 6.7% nationwide.

Economist Leila Bengali and Jerry Nickelsburg, authors of the California section of the forecast, predict Golden State unemployment will average 6.8% in 2021, 5.1% in 2022, and 4.1% in 2023 — still above the pre-pandemic level of 3.9%.

Golden State payrolls, which shrank 7% in 2020, will expand by 4.1% this year to more than 16.87 million, they estimate. That’s faster than the U.S. rate of 3.6%.

California jobs will grow by 3.1% and 2.3% the following years, according to the forecast.

“The state’s technology and logistics sectors, two sectors expected to lead the recovery, are proportionately larger than the U.S. average,” Nickelsburg said, adding that state government revenues are healthy, construction is reviving and cargo is pouring into California ports.