The quarterly UCLA Anderson Forecast predicts that accelerating job losses in construction and real estate finance will weaken California’s economy further than expected. However, unless another factor emerges, California will narrowly avoid a recession and instead will record “very weak but positive payroll growth through late 2008.”
The report’s predictions are more pessimistic this quarter than last and worse this year than in previous years. The state’s financial sector experienced more job losses than expected, mainly due to mortgage-related problems. In the second quarter of 2007, the financial sector lost approximately 5,500 mortgage-related jobs, coupled with 11,500 jobs lost in the construction industry.
According to the report’s author, UCLA Anderson economist Ryan Ratcliff, defaults on adjustable rate mortgages will probably peak in the first half of 2008, so real estate problems will continue to be a drag on California’s economy for at least another year.
Final note: If your employees are experiencing financial problems due to mortgage woes, you may want to recommend they seek assistance. Insert a reminder in the company newsletter that counseling may be available through your.
Continued housing woes may also affect your ability to recruit new employees, who may have trouble selling their homes. It may be time to brush off relocation packages not seen since the boom days of the 1990s.