‘Curb Your Enthusiasm,’ Caution UCLA Economists

Despite higher employment numbers, GDP growth still slow.

By City News Service

Economic output in California and the rest of the nation will grow only about 2 percent over the rest of the year, mirroring slow but steady improvements in the unemployment picture, UCLA economists said in a forecast released Wednesday.

The first quarterly UCLA Anderson Forecast of 2012 — “while acknowledging an improving employment situation, with more than half a million jobs created in the first two months of the year,” in the words of its authors — cautioned against excessive exuberance over current conditions.

“The stronger employment data are not appearing to translate into stronger overall GDP growth,” Anderson Forecast senior economist David Shulman wrote in a section on the national economy entitled “Curb Your Enthusiasm.”

GDP grew nationally by 3 percent in the final quarter of 2011 but real GDP growth will slow to an annual rate of around 2 percent for most of 2012, improving next year and again in 2014, according to the Anderson Forecast, which called this year’s anticipated growth “modest.”
Shulman argued that this year’s unseasonably warm winter weather drove the consumer conomy, acting as a job stimulant.

“We suspect that once the weather and the seasonal adjustment factors normalize in March and April, the economic data won’t look so ebullient,” Shulman wrote.

Additionally, “…the looming expiration of all of the Bush era tax cuts and the payroll tax cut will elevate economic uncertainty in the second half of the year,” according to the forecast

The forecast pointed to “continued slow steady gains in employment for the rest of 2012” in California and the nation as a whole and predicted that “international trading partners” would serve to generate faster growth in 2013 and 2014.

It called for slow growth in employment this year in California, “at about the national rate,” and said that when the economy picks up in 2013 and 2014, “the drivers” of the state’s economy will be technology, exports, health care, education and professional, scientific and business services.

The forecast predicted employment growth in California of 1.9 percent this year, 2.0 percent in 2013 and 2.6 percent in 2014.

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March 29, 2012  Copyright © 2012 Eastern Group Publications, Inc.

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