More Severe Recession Expected In California Than Nation Overall
The UCLA Anderson School of Management recently revised a forecast published on March 12th. The UCLA economists are now saying that the U.S. economy has entered a recession, ending the expansion that began eleven years ago in July 2009. Further, it is estimated California could be hit harder by this recession than the rest of the nation. The report specifically states, “For California, a state with a larger proportion of economic activity in tourism and trans-Pacific transportation, the economic downturn will be slightly more severe.”
By the first quarter of 2021, California is expected to lose more than 280,000 payroll jobs with more than one-third of those in the leisure and hospitality and transportation and warehousing sectors. For 2020, it predicted employment would drop by 0.7 percent, with the second and third quarters contracting at an annual rate of 2.6 percent. Further, it is estimated that the state's unemployment rate will rise to 6.3 percent by the end of this year and will likely continue to increase into 2021 with an average for 2021 of 6.6 percent.
It should be highlighted that the revised forecast comes with an important caveat. The report asserts, “If the pandemic is much worse than assumed, this forecast will be too optimistic. If the pandemic abates quickly because of the extraordinary measures being put into place to address it, an outcome that the medical community thinks unlikely but possible, then the forecast will be too pessimistic and economic growth in the third and fourth quarters of the year will be higher.” Notably, this marks the first time in its 68-year history that the UCLA Anderson Forecast has published an updated forecast between its regularly scheduled quarterly releases.
For more information, please see https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/2020-recession.