California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute

No surprises, but unemployment in the US and California are to remain high
created by the ‘Great Recession’ according to a UCLA quarterly forecast.

The UCLA Anderson Forecast renders a “bipolar” diagnosis for the national
economy, referencing the dual conditions of slow-but-sure growth in the
national gross domestic product, coupled with an unemployment rate predicted
to remain in double digits until 2012.

In a report entitled, “The Bipolar Economy,” UCLA Anderson Forecast Senior
Economist David Shulman explores the duality of a national economy, where
GDP is growing while job creation remains scarce – and is expected to remain
scarce through 2012. Mr. Shulman suggests that Washington’s economic stimulus
packages may have unintentionally caused the economic schizophrenia. Tax cuts
and spending programs, coupled with a non-sustainable zero interest policy spur
growth, but businesses do not make long-term hiring decisions based on temporary
government policies.

“Nevertheless, the economy is now on a growth path and employment will soon be
increasing, albeit modestly,” says Mr. Shulman. UCLA’s case for recovery is
based on strength in business equipment and software, exports and a revival
in home construction from postwar lows. With the exception of housing, these
factors are already making positive contributions to the economy.

Growth will be held back by declines in non-residential construction and
stagnation and retraction in the state and local government sectors, the
report says.

The UCLA Anderson Forecast expects the economy to grow at a 3.2 percent rate
for the first quarter of this year, and then level off to about 2 percent,
leaving 2010’s overall growth around 2.3 percent. In 2011 and 2012, GDP is
forecasted to be 2.3 percent and 3.2 percent respectively.

I am Tim Johnson and this has been the California Business Minute.