Thread: California expected to help rev up U.S. economy

California expected to help rev up U.S. economy

By Jonathan Horn3:34 P.M.DEC. 3, 2014

The nation’s economy will expand at its fastest pace since the end of the Great Recession, and California is going to have a lot to do with that success in the coming year, says a key economic forecast released Wednesday.

Chapman University’s Anderson Center for Economic Research expects the U.S. economy to grow at an annual rate of 3 percent in 2015, a pace not seen since 2007, the year in which the Great Recession began. That’s going to be largely driven by California, one of the world’s largest economies and a state that sells goods and services domestically and globally.

“We are a large economy, so what happens at the national level directly affects us,” said Esmael Adibi, who directs the center in Orange County. “Some people argue that because Europe and China are slowing down, exports may turn negative. We don’t think so, the reason being our largest trading partners, Canada and Mexico, they’re doing OK and make up for some of the downfall.”

Adibi said the U.S. gross domestic product was negative in 2008, which was the middle of the recession, and has since hovered between 2 and 2.5 percent at best. He said that’s largely because of slack in the labor market.

Now that the unemployment situation has improved, Chapman forecasts California employment growth to outpace the nation’s in 2015. Next year, the state should add 364,000 new payroll positions, good for 2.4 percent growth. That beats the nation’s expected 1.8 percent clip. Chapman predicts the U.S. unemployment rate to hit 5.6 percent in 2015, down from 6.2 percent this year. The improved job market also means more money to be spent in the economy, and therefore increased consumer confidence.

“The economy is moving along and it’s showing steady growth,” Adibi said. He noted that while some people fear another recession, that scenario is unlikely since the economy has not grown fast enough for there to be a large risk of it to fall.

Alan Gin, an economist at the University of San Diego, said he sees the nation’s economy growing even faster than Chapman predicts, with a 3.5 percent gross domestic product.

“The national economy just seems to have a lot of momentum right now, yes there is some weakness in Europe and in Japan,” he said. “I think the big help is the big drop in the price of oil.

That might hurt Texas but it helps the overall economy.”

The Anderson Center called the Great Recession in California six months before it happened. Last year’s forecast from the center correctly predicted this year’s national economic growth to be 2.2 percent, and that California’s payroll employment would grow at 3 percent. However, Chapman slightly underestimated the pace of national job growth, and overestimated the increase in housing prices across the country.

It also predicted the average rate for a 30-year fixed mortgage to rise to 5.1 percent, although it is currently at 4.2 percent. The center also forecast California housing prices to increase 4.9 percent, when in fact they were up 9.4 percent.

http://www.utsandiego.com/news/2014/...-jobs-exports/

San Diego Economy Continues to Improve

By MIKE ALLEN Wednesday, December 3, 2014

An index measuring San Diego’s economy rose 0.6 percent in October, the fifth consecutive month it’s increased, signaling solid growth at least through the end of 2015.

The USD Burnham-Moores Center for Real Estate Index of Leading Economic Indicators increased to 129.9, compared to 127 in October 2013.
Alan Gin, the USD economics professor who compiles the index, said the improving local labor market (civilian employment grew by 55,000 over the year) should give consumers confidence to spend extra money. Consumer spending accounts for more than two-thirds of gross regional product.

Other recent developments that should boost consumer spending are the big drop in gas prices, and a $1 increase in the minimum wage, Gin said.

In October, five of the six components that go into the index increased. The gains were in the unemployment claims (fewer, measured as a positive), the outlook for the national economy, the local consumer confidence rate, the amount of help wanted ads, and local stock prices. Only the issued number of residential building permits, which fell 1.72 percent, was a negative number.

http://www.sdbj.com/news/2014/dec/03...inues-improve/

http://www.alipac.us/f19/dow-s-p-500...s-news-315637/