The most recent UCLA Anderson Forecast lowered its California job-growth estimates from the already weak numbers that it forecast last year, but included a silver lining in an otherwise cloudy report by predicting that the state would avoid recession.
The report noted the state’s worsening budget outlook, greater than expected losses in the real estate-affected financial services sector and rising unemployment.
The major change between the past two reports was the worsening job market in the financial activities sector. Economist Ryan Ratcliff, author of the forecast, stated that the total “peak-to-trough” job loss in the financial sector would be 25,000, up more than 10,000 from the September forecast.
On the bright side, Ratcliff maintained that California would avoid a full-blown recession. Probably. He stated that certain developments in the past couple of months “have cast doubt on some of the finer points that support our forecast of no recession in California.” The report also noted that the Legislative Analyst’s Office in Sacramento recently reported that California might face an almost $10 billion hole in its budget in the next fiscal year. As a result, government employment growth will probably also slow in the second half of 2008.