About that California economy...

Wonder just when the California economy is expected to revive itself? According to economists at Chapman University, although the recession may technically lift by the second half of the year, we won't feel better about things until 2010. First, from an L.A. Times story:

The Chapman forecasters expect nonfarm payroll employment in California to continue falling into next year before beginning to rebound in the fourth quarter of 2010. California will lose an estimated 437,000 jobs in 2009 and an additional 56,000 jobs next year, they said...

Job losses have spilled across all sectors as layoffs in the construction industry led to cutbacks at law firms, accounting firms and most other sectors, excluding health and education. Even as the economy turns around, cautious companies will probably be slow to begin hiring again, which will lead to a sluggish recovery in the state...

The Southern California median home price last month was $249,000, down 51% from May 2007, according to figures released Wednesday by MDA DataQuick of San Diego. It's the fifth straight month that median prices have hovered around $250,000, though May did show a slight increase in prices for the region.

Chapman forecasters expect home prices to strengthen in 2010 as banks become more willing to lend to prospective buyers and fewer new homes come on the market. Home prices will rise 0.8% in the state next year after falling 35% in the state in 2008, the economists say...

A few days earlier, the UCLA Anderson Forecast released its own projections on the local and regional economy, and pretty much rained all over Chapman's parade, citing increasing unemployment and an economy that won't bounce back until at least late 2011. Also from an L.A. Times story:

Despite some healing in the national economy, California still faces significant difficulty, in part because of the state's budget woes, economic forecasters at UCLA say.

Unemployment in the state will reach 12.1% by the end of this year and will not return to single digits until late in 2011, economists predicted in the quarterly UCLA Anderson Forecast, which was set to be released today...

Construction jobs, which fell 12% in 2008, are expected to drop more than 15% this year as demand continues to fall for both residential and commercial development. Already, activity has dropped so dramatically in the state that developers are now under-building for the size of California's population, sowing the seeds of another housing bubble, the report said...

Bill Watkins, executive director of California Lutheran University's Center for Economic Research and Forecasting, agreed with the Anderson group that California faces a rougher road than the rest of the nation.

"California's economy is quite a bit weaker than the U.S. economy, and we don't expect to see a recovery any time soon," he said. The state will not come out of recession until the second half of 2011, he predicted...

So who's right and who's wrong? Well, UCLA insisted there was no recession until it was so painfully obvious they had no choice to reverse themselves (and without ever admitting any fault), and Chapman was so off on their projections for Orange County that the local BIA group decided to give another economic forecasting group a try for awhile. I guess we'll have to wait until 2011 to see!

UCLA expects a dismal 2009

After being somewhat late in calling the current recession, the UCLA Anderson Forecast is now predicting a dismal 2009 while dissing the private Chapman University's own forecasts. From an L.A. Times story:

Two million jobs could be lost nationwide next year under the weight of a severe global recession that shows no sign of relenting soon, UCLA forecasters say...

The nation's unemployment rate will rise to 8.5% by late 2009 or early 2010, according to the forecast -- further straining a job market that matched a 34-year high last month by shedding 533,000 positions.

Undergirding the joblessness will be a continued decline in real estate values, diminishing wealth as a result of the stock market crash and weaker consumer spending.

The negative forces are predicted to help change the trend in the nation's real gross domestic product from a growth of 1.3% this year to a 1.6% contraction next year. In 2010, the authors say, there might be a turnaround...

The forecast for California also appears grim. Manufacturing jobs are expected to disappear and tourism is likely to suffer from recessions overseas, the report said.

The state's unemployment rate, which is currently at 8.2%, could rise to 8.7% and remain there until 2010...

Retail, transportation, warehouse employment and temporary jobs are expected to suffer the most, while education and healthcare could hold steady...

The UCLA forecast comes two days after a similar report was released by Chapman University in Orange. A tongue-in-cheek rivalry has formed between the two schools.

James Doti, Chapman's president, chided UCLA for failing to call a recession during its forecast in June. He also trumpeted his economists for being among the first to deem the nation's economy in recession last year.

Leamer downplayed the issue in a phone interview Wednesday. "We don't particularly notice them," he said about Chapman.