This past week the UCLA Anderson School of Management released its latest US and CA economic forecasts. The report featured two scenarios for each forecast, recession and no recession. The “wild card” is whether or not the fed continues to raise interest rates, an action the Anderson School believes would likely push the US into a mild recession. Although this has not yet happened following the previous hikes, the possibility still exists. While core national inflation is currently at 4.9%, down from over 9% a year ago, it is still higher than the feds want. National job growth is still strong and if this continues, Anderson believes that the feds will likely continue to tighten monetary policy which will likely lead to the mild recession later this year.
For CA, the outlook is more optimistic. Although a state slowdown is possible if there’s a national recession, Anderson is confident that unlike the previous four economic slowdowns, the impact to CA will be very mild if at all. Four factors are key in the possible avoidance of a CA recession: additional construction; sufficient rainy-day balance maintained within the state budget; increased demand for defense manufacturing; and increased demand for equipment and software that reduce the need for labor. Even under the worst case recession scenario, Anderson expects CA unemployment to range from 4.4% to 4.8% from 2023 through 2025; CA growth in non-farm payroll jobs is expected to be 1.4% in 2023, 0.6% in 2024 and 1.6% in 2025; and CA real personal income is expected to increase by 1.5%, 1.8% and 0.6% over the same period. Net new housing permits are expected to be 91,000 this year, and expand to 154,000 in 2025.
If you are interested in reading the entire Anderson Report from June 7, please use the following link: UCLA Anderson Economic Forecast 6.7.23 .