UCLA: State job­less rate to hit 5% in 2017

Los Angeles Times - - BUSINESS BEAT - By Tif­fany Hsu tif­fany.hsu@la­times.com Twit­ter: @tiffh­su­la­times

Cal­i­for­nia’s un­em­ploy­ment rate is ex­pected to grad­u­ally fall un­til it matches the na­tional rate in 2017, ac­cord­ing to econ­o­mists from the UCLA An­der­son Fore­cast.

The de­crease will be driven by im­prove­ment in the con­struc­tion and au­to­mo­tive in­dus­tries, and by in­creased busi­ness in­vest­ment and con­sumer de­mand, the econ­o­mists pre­dict.

The state’s job­less rate, which fell to 6.3% in April, will av­er­age 6.2% this year, then 5.2% next year be­fore reach­ing 5% a year later, ac­cord­ing to the quar­terly report.

But.the fore­cast con­tains caveats. Re­cent eco­nomic ex­pan­sion has come paired with “an un­usu­ally large spike in the num­ber of longterm un­em­ployed” that ap­pears to be linked to the de­cline in man­u­fac­tur­ing and move­ments in the fi­nance, le­gal and pro­fes­sional ser­vices sec­tors, said econ­o­mist Jerry Nick­els­burg.

Com­bined with a burst of au­to­ma­tion in the work­place, tech­nol­ogy “has elim­i­nated jobs that no amount of stim­u­lus would bring back,” Nick­els­burg said.

Bar­ring im­mi­gra­tion, em­ploy­ers may find them­selves with­out a large pool of la­bor from which to re­cruit af­ter mid-2016, he said.

The UCLA report sin­gled out the high-tech in­dus­try in South­ern Cal­i­for­nia as lag­ging be­hind other lead­ing tech cen­ters. Econ­o­mist Wil- liam Yu noted that although the in­dus­try is de­vel­op­ing fast na­tion­wide, “Los An­ge­les is not among the top lead­ers in terms of patents, cap­i­tal or salary.”

The re­gion does, how­ever, host a num­ber of small busi­nesses that to­gether con­sti­tute a siz­able in­for­ma­tion sec­tor, Yu said. Fur­ther boost­ing Los An­ge­les’ ca­chet as a high-tech hub would at­tract bet­ter-pay­ing jobs — key for res­i­dents in an area known for its high cost of liv­ing, Yu said.

Na­tion­wide, eco­nomic growth lagged for the sec­ond straight year fol­low­ing stormy weather early in the year. Still, UCLA econ­o­mists an­tic­i­pate that GDP will reach a 3% growth rate by the third quar­ter — a pace that will re­main through the end of next year.

The con­struc­tion in­dus­try will be ro­bust be­cause of job gains, higher house­hold for­ma­tions, in­ter­est rates that re­main low and looser mort­gage un­der­writ­ing stan­dards, said econ­o­mist David Shul­man. Hous­ing starts are fore­cast to in­crease to 1.16 mil­lion this year from 1 mil­lion last year, fol­lowed by 1.37 mil­lion starts next year.

And although con­sumers so far have taken ad­van­tage of lower gaso­line prices — a roughly $150-bil­lion an­nu­al­ized re­duc­tion — largely by pay­ing down debts or buf­fer­ing their sav­ings ac­counts, econ­o­mists fore­see an even­tual boost in spend­ing.

Justin Sullivan

IM­PROVE­MENT in the con­struc­tion in­dus­try will help the state, the UCLA An­der­son Fore­cast says.

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